Effects of economic growth target on the urban–rural income gap in China: An empirical study based on the urban bias theory

Abstract

Urban–rural imbalance is a common phenomenon, and its prominent manifestation is the sustained expansion of the urban–rural income gap. For emerging countries, this gap encountered during the development process should be addressed by promoting development, which also puts forward high requirements for economic management. Inspired by political economy theory and the widening urban–rural income gap in China, this study constructs a theoretical framework of “purpose-behavior-performance-structure” based on the urban bias theory, and then quantitatively examines the effect of economic growth target on the urban–rural income gap based on panel data at the provincial level. In addition, we explore the mechanism by which economic growth targets affect the urban–rural income gap with the mediating effect model, and investigate the impact of marketization and spatial structure on the relationship between economic growth targets and urban–rural income gap with the moderating effect model. The results show that the economic growth target significantly contributes to the widening urban–rural income gap in the face of the political promotion incentives and economic growth target accountability system, and this effect exhibits substantial spatiotemporal heterogeneity. In addition, fiscal expenditure, fixed asset investment, and labor mismatch under urban bias are important mechanisms that lead to the widening urban–rural income gap, and the marketization level and spatial structure significantly affect this relationship. We put economic growth management, urban bias, and urban–rural income gap into the “purpose-behavior-performance-structure” theoretical framework, which provides a new explanatory perspective for understanding the urban–rural income gap in emerging economies, and new policy insights for rational economic growth management. • Provide a heuristic analytical framework to explain why urban bias is so difficult to eliminate in developing countries. • Explore the mechanism of economic growth management leading to a widening urban–rural income gap with the urban bias theory. • Propose suggestions that are conducive to coordinated urban–rural development for developing countries.