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Globalization And Regional Income Inequality: Empirical Evidence From Within China

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Author Info
Guanghua Wan
Ming Lu
Zhao Chen
Abstract

China's recent accession to the WTO is expected to accelerate its integration into the world economy, which aggravates concerns over the impact of globalization on the already rising inter-region income inequality in China. This paper discusses China's globalization process and estimates an income generating function, incorporating trade and FDI variables. It then applies the newly developed Shapley value decomposition technique to quantify the contributions of globalization, along with other variables, to regional inequality. It is found that: (a) globalization constitutes a positive and substantial share of regional inequality and the share rises over time; (b) domestic capital, however, emerges as the largest contributor to regional inequality; (c) economic reform characterized by privatization exerts an increasingly significant impact on regional inequality; and (d) the relative contributions of education, location, urbanization and dependency ratio to regional inequality have been declining. Copyright © 2007 The Authors; Journal compilation © International Association for Research in Income and Wealth 2007.

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File URL: http://www.blackwell-synergy.com/links/doi/10.1111/j.1475-4991.2007.00217.x/enhancedabs
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Article provided by Blackwell Publishing in its journal Review of Income and Wealth.

Volume (Year): 53 (2007)
Issue (Month): 1 (03)
Pages: 35-59
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Handle: RePEc:bla:revinw:v:53:y:2007:i:1:p:35-59

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