Abstract: Based on the characteristics of “double dual structure” in China′s transition economy, and the analysis of the relationship between ownership structure, fiscal expenditure and urban-rural income gap by building a double dual structure model, this article provides perspective of ownership structure and fiscal expenditure to analyze the reasons why the income gap between urban and rural areas in China is high and the difference between urban and rural income gap in different regions by using Chinese provincial-level panel data from 2007 to 2015. The empirical results show that there is a “positive U-shaped” relationship between the proportion of state-owned economy and urban-rural income gap; there exists an “inverted U-shaped” relationship between fiscal expenditure and urban-oriented fiscal expenditure and urban-rural income gap, rural-oriented fiscal expenditure can narrow urban-rural income gap, the proportion of state-owned economy reduces the positive effect of fiscal expenditure or urban-oriented fiscal expenditure on urban-rural income gap; in the eastern and central regions, the state-owned economy narrowed the income gap between urban and rural areas; fiscal expenditures and urban-oriented fiscal expenditures have always widened the urban-rural income gap. Therefore, adjusting the tendency of expenditures and choosing the optimal ownership structure through market-oriented reforms is conducive to narrowing the urban-rural income gap.

Key words: urban-rural income gap, ownership structure, fiscal expenditure, double dual structure