Effect of the international tourism island policy on Hainan Farmers' income and the urban-rural income gap: An analysis based on the GPCA and SCM models

Abstract

The construction of Hainan International Tourism Island, one of the national strategies in China, implemented in January 2010. A common concern is whether the policy has managed to raise farmers' income and reduce the income gap between urban and rural residents. Therefore, this study aims to make counterfactual causal inferences based on data from 2005 to 2018 on Hainan Province. This study applies both the generalized principal component analysis method and the synthetic control method. According to the model results, the policy did not increase farmers' income in Hainan or narrow the income gap between urban and rural areas in the first five years. However, after 2014, the result reversed. The increasing farmers' income and narrowing gap indicate that the tourism-related Kuznets curve hypothesis is valid for the policy. The results of a placebo test verify the robustness of this conclusion.