The unbalanced development between urban and rural areas has always been a key issue that both the Party Central Committee and academic researchers have paid attention to it. In recent years, the income of the elders in China has been improving with economic development, while the urban-rural income gap of the elders is widening. At the same time, the Chinese population is aging rapidly, which result in a high proportion of elders. Since the elders are significantly different from the young and middle-aged in many aspects, the urban-rural income gap of the elders needs to be theoretically discussed in-depth; meanwhile, corresponding policy recommendations should be proposed. This paper focuses on the urban-rural income gap of the elders, and mainly discusses two aspects. One is analyzing the impact of pensions on the urban-rural income gap of the elders, and the other is evaluating quantitatively the policy choices for adjusting the urban-rural income gap of the elders. This paper uses the data of China Household Finance Survey (CHFS) in 2017 to analyze the rural-urban income gap of the elderly in China, and uses the Oaxaca-Blinder decomposition method and the RIF decomposition method to estimate the explanatory effects of various factors on urban-rural income gap of the elderly from multiple quantiles of residents’ income. The results show that compared with middle and young people, the urban-rural income gap between the elderly and the young is more serious. With the increase of the age of the elderly, the urban-rural imcome gap has gradually widened. The difference of endowment insurance is an important factor on income between urban and rural elderly, which can explain 96. 7% of the average urban-rural income gap of the elders, and its contribution gradually decreases with the rise of income quintiles. The article proposes and quantitatively examines three reform plans; meanwhile it found that improving the coverage rate of old-age insurance and promoting the establishment of a unified urban-rural resident pension system are beneficial to reduce the urban-rural income gap of elders, which has important applications in promoting the balanced development of urban and rural areas, achieving the great goal of common prosperity.
