The threshold effect of urban–rural income gap on economic growth in urbanization: evidence from China

ABSTRACT

Using a panel data set covering 31 provinces, autonomous regions and municipalities directly under the Central government in China over the period from 2005 to 2018, this article investigates the impact of urban–rural income gap on economic growth under the background of urbanization. This article employs a threshold panel regression model that allows for urbanization-level thresholds and find strong evidence of the second half of the n-shaped relationship between urban–rural income gap and economic growth in our sample. Then, this article concludes the theoretical hypothesis that there is an N-shaped relationship between the urban–rural income gap and economic growth in the process of urbanization.

KEYWORDS:

• Urban–rural income gap
• economic growth
• urbanization
• threshold

JEL CLASSIFICATION:

• O53
• D31

Disclosure statement

No potential conflict of interest was reported by the author(s).