Did Rural Residents Income Improve after Withdrawing Counties into Districts and Establishment of Districts?—Policy Evaluation Based on Difference in Differences Model
Achieving common prosperity is not only an essential requirement of the socialist system but also a crucial goal for China to realize socialist modernization.The overall improvement of income levels in rural areas is paramount in fulfilling this requirement.The administrative district restructuring method of"withdrawing counties into districts"serves not only as a significant means to promote urbanization but also as a vital tool to stimulate regional economic development and facilitate urban expansion.Distinguishing itself from existing research perspectives on administrative district restructuring,this paper focuses on rural areas as the research unit and employs the perspective on rural residents'income,enriching the understanding of the policy effects of the"withdrawing counties into districts"reform.Using the period from 2006 to 2020 as a quasi-natural experiment for the reform of"withdrawing counties into districts"in China,this paper employs a multi-time point Difference-in-Differences(DID)model to investigate the impact of the reform on rural residents'income.Various econometric methods are applied to test the robustness of the baseline regression results.The following conclusions are reached:(1)While existing academic research has confirmed the positive impact of"withdrawing counties into districts"on regional economic growth,But it is difficult to reconcile economic growth with income equity.Under the influence of this government-driven urbanization reform,local governments,aiming for rapid urbanization,tend to convert a considerable amount of arable land into construction land.This increases the resource endowment pressure on rural residents and reduces the per capita resource holding in rural areas.The decrease in the financial autonomy also affects the development planning of the original county governments,leading to lack and misallocation of funds for agricultural support.Consequently,the"withdrawing counties into districts"reform significantly reduces the rural residents'income in the areas that have been merged.Results from parallel trends tests also affirm that the decrease in income for farmers in merged counties is attributed to the effect of the""withdrawing counties into districts""policy rather than other unobservable factors.(2)Based on the results of the baseline regression,this paper argues that the adoption of corrective mechanisms to improve the impact of the"withdrawing counties into districts"reform is a more important issue.Therefore,through further analysis,it is found that developing inclusive finance and decentralization of fiscal power can have a positive moderating effect on the impact of"withdrawing counties into districts"reform,and therefore these initiatives can be used as corrective mechanisms in the process of"withdrawing counties into districts"reform.So as to realize the positive effects of"withdrawing counties into districts"reform in terms of people's livelihood.
Withdraw counties into districtsCommon prosperityRural residents incomeDID model
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