How Green Finance Reform Narrows the Urban-Rural Income Gap: Evidence from China

Huiji Wang ()
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Huiji Wang: School of Humanities and Public Administration, Jiangxi Agricultural University, Nanchang 330045, China

Sustainability, 2025, vol. 17, issue 18, 1-21

Abstract: Addressing the persistent urban-rural income gap is critical for sustainable and inclusive development. Leveraging panel data from 286 Chinese prefecture-level cities (2005–2022) and a multi-period difference-in-differences design, this study evaluates the impact of China’s Green Finance Reform and Innovation Pilot Zones (GFRIPZ) policy. First, the GFRIPZ policy significantly narrows the urban-rural income gap, with results robust to a range of sensitivity tests. Second, this convergence is driven by curbing conventional transport-infrastructure expansion and enhancing tertiary-sector employment, thereby improving labor quality. Third, policy effectiveness varies geographically and administratively, with the strongest impacts in central and western regions and non-provincial capitals. Fourth, negative spatial spillovers arise as pilot zones draw resources from neighboring non-pilot areas. These findings highlight the transformative potential of targeted green finance reforms for inclusive structural transformation in emerging economies.

Keywords: green finance; urban-rural income gap; inclusive growth; spatial spillovers; regional heterogeneity (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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