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Income Inequality in Rural China: Regression-based Decomposition Using Household Data

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Author Info
Guanghua Wan
Zhangyue Zhou

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Abstract

A considerable literature exists on the measurement of income inequality in China and its increasing trend. Much less is known about the driving forces of this trend and their quantitative contributions. Conventional decompositions, by factor components or by population subgroups, provide only limited information on the determinants of income inequality. This paper represents an early attempt to apply the regression-based decomposition framework to the study of inequality accounting in rural China, using household-level data. It is found that geography has been the dominant factor but is becoming less important in explaining total inequality. Capital input emerges as a most significant determinant of income inequality. Farming structure is more important than labor and other inputs in contributing to income inequality across households. Copyright United Nations University 2005.

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Article provided by Blackwell Publishing in its journal Review of Development Economics.

Volume (Year): 9 (2005)
Issue (Month): 1 (02)
Pages: 107-120
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Handle: RePEc:bla:rdevec:v:9:y:2005:i:1:p:107-120

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Ravallion, Martin & Chen, Shaohua, 1999. " When Economic Reform Is Faster Than Statistical Reform: Measuring and Explaining Income Inequality in Rural China," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(1), pages 33-56, February. [Downloadable!] (restricted)
  2. Chen, Jian & Fleisher, Belton M., 1996. "Regional Income Inequality and Economic Growth in China," Journal of Comparative Economics, Elsevier, vol. 22(2), pages 141-164, April. [Downloadable!] (restricted)
  3. Griffin, Keith & Saith, Ashwani, 1982. "The Pattern of Income Inequality in Rural China," Oxford Economic Papers, Oxford University Press, vol. 34(1), pages 172-206, March. [Downloadable!] (restricted)
  4. Wan, Guanghua, 2002. "Regression-based Inequality Decomposition: Pitfalls and a Solution Procedure," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
  5. Bourguignon, Francois, 1979. "Decomposable Income Inequality Measures," Econometrica, Econometric Society, vol. 47(4), pages 901-20, July. [Downloadable!] (restricted)
  6. Wan, Guang H & Cheng, Enjiang, 2001. "Effects of Land Fragmentation and Returns to Scale in the Chinese Farming Sector," Applied Economics, Taylor and Francis Journals, vol. 33(2), pages 183-94, February. [Downloadable!] (restricted)
  7. Wan, Guanghua, 2004. "Accounting for income inequality in rural China: a regression-based approach," Journal of Comparative Economics, Elsevier, vol. 32(2), pages 348-363, June. [Downloadable!] (restricted)
  8. Jonathan Morduch & Terry Sicular, 2002. "Rethinking Inequality Decomposition, With Evidence from Rural China," Economic Journal, Royal Economic Society, vol. 112(476), pages 93-106, January. [Downloadable!] (restricted)
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  9. Yuen Tsui, Kai, 1991. "China's regional inequality, 1952-1985," Journal of Comparative Economics, Elsevier, vol. 15(1), pages 1-21, March. [Downloadable!] (restricted)
  10. Shujie Yao, 1997. "Industrialization and spatial income inequality in rural China, 1986-92," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 5(1), pages 97-112, 05. [Downloadable!] (restricted)
  11. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-42, June. [Downloadable!] (restricted)
  12. Knight, John & Song, Lina, 1993. "The Spatial Contribution to Income Inequality in Rural China," Cambridge Journal of Economics, Oxford University Press, vol. 17(2), pages 195-213, June.
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Zhang, Yin & Wan, Guanghua, 2006. "The Impacts of Growth and Inequality on Rural Poverty in China," Working Papers RP2006/94, World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
    Other versions:
  2. Muller, Adrian, 2006. "Clarifying Poverty Decomposition," Working Papers in Economics 217, Göteborg University, Department of Economics, revised 17 Nov 2008. [Downloadable!]
  3. Ming Lu & Jianzhi Zhao, 2009. "The Contribution of Social Networks to Income Inequality in Rural China: A Regression-Based Decomposition and Cross-Regional Comparison," Global COE Hi-Stat Discussion Paper Series gd08-019, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
  4. Gajwani, Kiran & Kanbur, Ravi & Zhang, Xiaobo, 2006. "Comparing the evolution of spatial inequality in China and India: a fifty-year perspective," DSGD discussion papers 44, International Food Policy Research Institute (IFPRI). [Downloadable!]
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