Inclusive insurance development and common prosperity in the perspective of urban-rural income gap

There is still a sizable economic discrepancy in China between urban and rural areas, and closing this gap is crucial to fostering prosperity. The impact of inclusive insurance on the income gap between urban and rural areas has received little attention in the literature. We propose the China Inclusive Insurance Index (CII), which covers four dimensions and thirteen indicators, and has been used to conduct an empirical study on the impact and mechanism of China's inclusive insurance development on the urban-rural income gap. The research finds the development of inclusive insurance significantly reduces the income gap between urban and rural areas, and its major mechanism is to smooth out income fluctuations and encourage investment in financial assets, physical capital and human capital.