Welfare Financial Expenditure of Urban and Rural Income Gap

Based on the provincial panel data 1998—2012 of 31 provinces( municipalities directly under the central government,autonomous regions) during 1998—2012,from the aspect of region and time as a breakthrough point to build a fixed effect model and dynamic GMM model,the empirical study on how welfare spending affects the income gap between urban and rural areas is made. Research shows that: the welfare financial expenditure in different time and area of the influence of income gap between urban and rural areas is quite different; education,social security welfare financial expenditure accounts for more than in the income gap between urban and rural areas,medical and financial expenditure for supporting agriculture show a smaller influence,and have positive and negative effects over time and areas. The government should perfect the welfare financial expenditure structure,tend to increase the rural welfare expenditure on education( particularly the Midwest rural),and increase education resources for rural migrant workers. The urban and rural social security expenditure proportions should be balanced to establish a more equitable and sustainable social security system.