Impact of the introduction of high-speed rail on the income gap between urban and rural residents

Abstract

The unprecedented expansion and development of high-speed rail (HSR) in China provides a unique opportunity and a new way of thinking for addressing the problem of urban-rural wealth disparities. In this paper, I examine the impact of the introduction of HSRs on the income disparity between urban and rural residents in China. Using panel data from 285 prefecture-level cities from 2004 to 2018, in this paper I employ the double-difference method to assess the impact of HSR on the income gap between urban and rural populations and the mechanism of its action; furthermore, I explore the influence of HSR on urban residents’ per capita disposable income and rural residents’ per capita net income, as well as the impact of HSR on the flow of elements such as labor and capital. My research findings reveal that the introduction of HSR has greatly widened the income gap between urban and rural residents; however, there is heterogeneity between different East, Central, and West regions, as well as between different levels of cities. A further mechanism study finds that HSR lowers farmers’ per capita net income, raises urban residents’ per capita disposable income, and widens the urban/rural income gap via mechanisms such as facilitating the interregional mobility of labor and capital factors. Therefore, it is necessary to comprehensively assess the economic effects brought about by HSR, strengthen the construction of urban-rural transport networks, and improve support for rural areas, so as to promote the coordinated development of inter-regional and urban-rural areas.