Addressing Rural–Urban Income Gap in China through Farmers’ Education and Agricultural Productivity Growth via Mediation and Interaction Effects

Abstract

Narrowing the rural–urban income gap is an important challenge in achieving sustained and stable economic and social development in China. The present study investigates the role of farmers’ education and agricultural productivity growth in influencing the rural–urban income gap by applying mediation, interaction, and quantile regression models to provincial panel data of China from 2003 to 2017. Results show that, first of all, China’s agricultural productivity (TFP) continues to improve, and it is mainly driven by technical change (TC), with no significant role of technical efficiency change (TEC) or stable scale change (SC). Improving farmers’ education not only directly narrows the rural–urban income gap but also indirectly improves agricultural productivity to further narrow the rural–urban income gap. Due to differences in income sources of farmers, the corresponding impacts of farmers’ education and agricultural productivity growth on the rural–urban income gap also differ. Policy recommendations include continued investments in farmers’ education and training as well as modernization of agricultural for higher productivity growth.