An Empirical Analysis of the Development of Stock Market and the Income Gap between Urban and Rural Areas

Abstract

—The impact of the development of the stock market on the income gap between urban and rural areas is one of the issues that the financial theorists and the industry pay close attention to. This paper uses the 2005-2019 China stock market development data and urban and rural residents’ income data as an object of the research, and uses Granger causality test to analyze the relationship between stock market development and urban and rural income gap. We find that the development of the stock market has a significant positive impact on reducing the income gap between urban and rural areas. Therefore, the state should speed up the development of the stock market and improve financial efficiency through the development of the stock market.