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Changes in income inequality and welfare under economic transition: evidence from urban China

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  • Qingbin Wang
  • Guanming Shi
  • Yi Zheng

Abstract

The paper examines the changes in income inequality and welfare in urban China from 1981 to 1999. While the Lorenz curves estimated using Kakwani's interpolation method indicate that the level of income inequality in urban China has increased significantly since 1981, welfare comparisons based on generalized Lorenz curves suggest that the rise in real average income has more than compensated for the increase in inequality and has therefore brought about continuous improvement in welfare since 1981, except in 1988 and 1989 due to high inflation rates. Nevertheless, it is becoming very critical for China to develop welfare programmes and a social security system to provide a guaranteed living standard for low-income households.

Suggested Citation

  • Qingbin Wang & Guanming Shi & Yi Zheng, 2002. "Changes in income inequality and welfare under economic transition: evidence from urban China," Applied Economics Letters, Taylor & Francis Journals, vol. 9(15), pages 989-991.
    • Handle: RePEc:taf:apeclt:v:9:y:2002:i:15:p:989-991
    DOI: 10.1080/13504850210148134
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    References listed on IDEAS

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    1. Cecilia Garcia-Penalosa & Eve Caroli & Philippe Aghion, 1999. "Inequality and Economic Growth: The Perspective of the New Growth Theories," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1615-1660, December.
    2. Zhang, Renze & Tam, Mo-Yin S., 1991. "Changes in income distributions in China in the process of economic reform in the 1980s: A welfare approach," China Economic Review, Elsevier, vol. 2(1), pages 97-114.
    3. repec:dau:papers:123456789/10091 is not listed on IDEAS
    4. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
    5. Adelman, Irma & Sunding, David, 1987. "Economic policy and income distribution in China," Journal of Comparative Economics, Elsevier, vol. 11(3), pages 444-461, September.
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    Cited by:

    1. Zhiming Cheng, 2014. "Layoffs and Urban Poverty in the State-Owned Enterprise Communities in Shaanxi Province, China," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 116(1), pages 199-233, March.
    2. Luo, Xubei & Zhu, Nong, 2008. "Rising income inequality in China : a race to the top," Policy Research Working Paper Series 4700, The World Bank.
    3. GOH, Chor-ching & LUO, Xubei & ZHU, Nong, 2009. "Income growth, inequality and poverty reduction: A case study of eight provinces in China," China Economic Review, Elsevier, vol. 20(3), pages 485-496, September.
    4. Sumie Sato & Mototsugu Fukushige, 2012. "The Chinese economy and income inequality among East Asian countries," China Economic Journal, Taylor & Francis Journals, vol. 5(1), pages 1-15.
    5. Ann Owen & Bing Yu, 2007. "Regional differences in wage inequality across industries in China," Applied Economics Letters, Taylor & Francis Journals, vol. 15(2), pages 113-116.

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