Research on the spatial effect of local government competition on urban–rural income gap in China

Purpose The rural revitalization is a significant indicator of social development in China. Despite the crucial role that local governments play in coordinating urban and rural development, rural areas continue to face limited investment opportunities and scholarship on the impact of local government competition on urban–rural income disparity is scant, especially lacking empirical research from the spatial perspective. The authors contribute to closing the knowledge gap by exploring the spatial spillover effect of local government competition using the sample of China. Design/methodology/approach This study evaluated the urban–rural income inequality using the Theil index and constructed the spatial Durbin model to analyze the data by the method of maximum likelihood estimation. Findings The findings from the Theil index showed that the income gap is significant between city and countryside in China, with being wider in the western region compared to the eastern region. The evidence from the spatial Durbin model revealed that, in the same province, local government competition widens this gap, while competition from neighboring regions prompts a reduction in this gap in this province. Practical implications The authors recommended some policy implications, such as supporting the development in underdeveloped regions and improving the promotion evaluation criteria for local officials. Originality/value This article is original in exploring the spatial effects of local government competition on the urban–rural income gap. In addition, instead of using a single proxy to measure the urban–rural income gap, in the current paper, the Theil index for evaluating the disparity is incorporated. Peer review The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-07-2023-0582