Fiscal Transparency and Income Gap: Evidence from China

This paper provides the first prefecture-level evidence for China linking a specific measure of municipal fiscal disclosure to a specific measure of the urban-rural mean income gap. Using a panel of 282 cities from 2013 to 2021, the results reveal a robust negative association between fiscal transparency and income disparities. This narrowing gap is primarily driven by significant gains in rural per capita disposable income. The findings further demonstrate diminishing marginal returns as the impact of transparency is most pronounced in jurisdictions with lower baseline disclosure levels. These results are confirmed through a strictly non-interpolated dataset and winsorized controls to ensure they are not driven by data imputation or outliers. Finally, the evidence is consistent with two primary pathways involving the optimization of public expenditure structures and the advancement of digital inclusive finance.