Assessing the spatial and temporal differences in the impacts of factor allocation and urbanization on urban-rural income disparity in China, 2004-2010

Drawing on a cross-provincial panel dataset from 2004 to 2010, and grounded in urban-bias theory, this study analyzes the extent to which China's urban rural income disparity is determined by factor allocation and urbanization. It empirically tests whether such associations vary between provinces and change over time by considering the presence of spatial dependence and heterogeneity. The results of panel data regression first indicate that differences in factor allocation are major contributors to the enlargement of urban rural income disparity, and urbanization narrows this income gap. Nonetheless, spatial and temporal differences in such impacts are observed using a geographically weighted regression technique. Educational resource allocation only exerts an effect in many eastern and central provinces, with its influence increasing during the period, whereas the impact of capital allocation is obvious in most western provinces and remains relatively stable. In addition, government spending allocation is increasingly effective in most central and western provinces, yet the influence of financial resource allocation is weakening. Finally, urbanization has an enduring impact on all provinces. The policy implications of these findings are discussed. (C) 2013 Elsevier Ltd. All rights reserved.