“First Kilometer” to realize common prosperity: impact of public bus expansion into villages on farmers’ income mobility

Using data from the China Health and Nutrition Survey (CHNS) dated from 1991 to 2015, we assess the impact of public bus expansion into villages on income mobility of rural household, particularly, with low income. This paper finds that the income mobility of low-income households is suffered from the expansion of public buses in the rural areas. Due to the ‘crowding out’ effect, the low-income families are excluded from the non-agricultural employment brought by the public bus expansion, which nevertheless does not improve the agricultural production structure. This can explain why the low-income group has been marginalized during the process of urban-city integration in China. Improvement of the human capital can significantly alleviate the negative impact of public bus expansion on the low-income group in rural areas, while the child-care burden aggravates the issue. These results may also have policy implication for potential solutions to problems such as the ‘First Kilometer’ to realize common prosperity is not simply about the modernization in the infrastructure but also equalization of opportunities through cultivation of human capital.