Is farmland financial innovation narrowing the urban-rural income gap? A cross-regional study of China

• Published in: PloS one Vol. 17; no. 6; p. e0269503
• Main Authors: Li, Ting, Li, Jing-Ya
• Format: Journal Article
• Language: English
• Published: United States Public Library of Science 03.06.2022; Public Library of Science (PLoS)
• Subjects: Agricultural economics; Agricultural land; Agriculture; China; Cities; Earth Sciences; Economic aspects; Economic Development; Economic growth; Economic research; Economics; Equilibrium; Farmers; Farms; Financial services industry; Humans; Income; Income distribution; Income inequality; Innovations; Labor; Labor force; Land use; Landowners; Medicine and Health Sciences; Metropolitan areas; Migrant workers; Migration; People and Places; Private property; Property rights; Regional development; Rural areas; Rural Population; Social Sciences; Sparsely populated areas; Urban areas; China
• ISSN: 1932-6203; 1932-6203
• DOI: 10.1371/journal.pone.0269503

Over the past four decades, China’s economy has experienced tremendous economic growth but also a widening urban-rural income gap. Given the dilemma of the urban-rural income gap in China explained by neoclassical equilibrium theory, this paper attempts to provide a new theoretical explanation for the large-income gap between urban and rural areas in China. We select data from 30 provinces(cities) in China over the period from 2006 to 2017 as a sample to investigate whether and how the degree of farmland financial innovation narrows the urban-rural income gap. The results show that the coefficient for farmland financial innovation is significantly negative at the 1% level, signifying that financial innovation can narrow the urban-rural income gap in China. The mediation effect test provides evidence that farmland financial innovation narrows the urban-rural income gap by promoting the permanent migration of the labor force and upgrading the industrial structure. Our results indicate that the government should promote various forms of farmland financial innovation, establish rural property rights transaction system and free farmers from deep farmer-land attachment to realize permanent labor migration.