Using data on China's provincial economies for the period 1978-2005, we decomposed the causes and factors that have contributed to inter-regional per capita income disparity. Variance in capital per employee and variance in capital elasticity are found to be the two main sources of income disparity while the employment-labour force ratio is shown to be an important factor in containing the rise of income disparity. An analysis on inter-regional factor reallocation effects reveals their relatively small and insignificant contributions to overall growth performance. It is also discovered that capital has in most years flowed in the right direction to pursue higher marginal productivity across provincial economies. Inter-provincial labour movement, on the other hand, had not displayed significant equilibrating effects until institutional reforms started to allow freer inter-regional labour mobility in later years. Generally, we conclude that market-oriented factor mobility has played a crucial role in equalizing factor returns as well as enhancing growth efficiency across regions. Copyright (c) 2008 The Author Journal compilation (c) 2008 The European Bank for Reconstruction and Development .
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Publisher Info
Article provided by The European Bank for Reconstruction and Development in its journal Economics of Transition.