Does Rural Collective Economy Alleviate Urban-Rural Income Inequality? Evidence from China

This study investigates how rural collective economic development influences urban-rural income inequality in China, drawing on provincial panel data from 2006 to 2023. Our empirical strategy, employing a two-way fixed effects model, reveals a significant inequality-reducing effect, which holds under robustness and endogeneity checks. The analysis establishes that the effect primarily operates through three mechanisms: expanded reproduction, income distribution, and public goods supply. Heterogeneity tests show stronger effects in disadvantaged regions, and further discussion finds a more potent redistributive role in high-inequality provinces. By elucidating these channels from income and distribution perspectives, this paper provides crucial insights for achieving balanced regional development and common prosperity.