Abstract: As a core component of the social endowment insurance system, the basic endowment insurance for urban and rural residents should play a role in further cracking the urban-rural dual pattern, adjusting income distribution and narrowing the urban-rural gap while better solving the problem of “providing for the elderly”. Based on the provincial panel data from 2011 to 2020 and the China Household Tracking Survey (CFPS) data, this paper gradually made an empirical test and analysis of the adjustment effect of the income gap of basic endowment insurance on urban and rural residents at the current stage, by combining macro and micro perspectives. The results show that at the national level, there was a significant non-linear relationship between the development of basic endowment insurance for urban and rural residents and the urban-rural income gap at this stage, and presented an “inverted U-shaped” trajectory of first expanding and then narrowing; at the same time, microscopic examination also partially verified this result. Therefore, this paper proposes: first, we should attach great importance to the income distribution adjustment function and differential development trend of basic endowment insurance for urban and rural residents; second, we should gradually improve the payment and treatment adjustment mechanism of basic endowment insurance for urban and rural residents; third, we should give better play to the basic old-age insurance of urban and rural residents’ functions of eliminating old-age poverty and adjusting income distribution through high-quality development and promoting the income growth of farmers and vulnerable groups.