Abstract
This paper examines the economic growth and reduction of income disparity under the population migration policy and rural area development in China with an econometric model. The model assesses the impacts of income disparity due to investment and remittance to the place of household registration. The econometric model used to assess these impacts is characterized by an intrinsic combination of demand-oriented short-term mechanisms and supply-side medium- to long-term dynamics, where the balance of aggregate demand and supply determines the cyclic phase of the economy as represented by the overall utilization of production capacity along the long-term path.
The simulations and the forecasts of this model show that continuance of stable economic growth while reducing income disparity in China is necessary to relax the population migration policy, expand investment in rural areas, and improve the education level in rural areas.
JEL Classification: C50, J31, O15, O18, O47, R15
