Can Urban Green Transformation Reduce the Urban–Rural Income Gap? Empirical Evidence Based on Spatial Durbin Model and Mediation Effect Model

The urban green transformation is the basis for the green development of China’s economy, and the reduction of income inequality between urban and rural areas is necessary to ensure stable economic growth. Therefore, ensuring green and sustainable economic development, while taking into account social equity, is of practical importance for China to achieve comprehensive high-quality development. This paper constructs a spatial Durbin model and a mediating-effects model to examine the spatial effect of urban green transformation on the urban-rural income gap (URG) and its mechanism of action based on panel data of 265 cities in China from 2006 to 2018. It also divides cities by geographical location and urban population size to further investigate the heterogeneity of the impact of the urban green transition on URG. The study found that (1) there is a significant positive spatial correlation for the URG in China, and the urban green transition can reduce the URG, and the results of the study remain reliable after a series of robustness tests. (2) Urban green transformation can reduce the URG through technological innovation effects and digital effects. (3) Urban green transformation significantly reduced the URG in eastern regions and cities of considerable size and above and had no significant impact on the URG in other cities. The study results demonstrate the possibility of reconciling urban and rural economic development and environmental friendliness at the same time.