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Income and Consumption Inequality in Urban China: 1992-2003

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  • Hongbin Cai
  • Yuyu Chen
  • Li-An Zhou

Abstract

Using the nationally representative Urban Household Income and Expenditure Survey (UHIES) conducted by the National Bureau of Statistics (NBS) of China, we document a steadily rising trend in income and consumption inequality during the period from 1992 to 2003 in urban China. Despite the rising urban inequality over time, the social welfare of urban residents unambiguously improved because every income group saw their income and consumption increase over this period (higher income groups experienced faster increases). Moreover, consumption inequality follows income inequality very closely. Labor income inequality accounts for about two-thirds of total income inequality quite consistently over time. We find that only about one-third of urban inequality can be attributed to observable individual choices and characteristics, of which education has increasing explanatory power, while regional differences become less important over time. We also find that restructuring of the SOE sector, urbanization, and globalization are important contributing factors to rising overall urban inequality and the within-group inequality not accounted for by observable individual choices and characteristics. (c) 2010 by The University of Chicago. All rights reserved..

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Bibliographic Info

Article provided by University of Chicago Press in its journal Economic Development and Cultural Change.

Volume (Year): 58 (2010)
Issue (Month): 3 (04)
Pages: 385-413

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Handle: RePEc:ucp:ecdecc:v:58:y:2010:i:3:p:385-413

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Web page: http://www.journals.uchicago.edu/EDCC/

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Cited by:
  1. John Whalley & Chunbing Xing, 2010. "The Regional Distribution of Skill Premia in Urban China," NBER Working Papers 16575, National Bureau of Economic Research, Inc.
  2. Hung-Hao Chang, 2012. "Consumption inequality between farm and nonfarm households in Taiwan: a decomposition analysis of differences in distribution," Agricultural Economics, International Association of Agricultural Economists, vol. 43(5), pages 487-498, 09.
  3. Meng, Xin & Shen, Kailing & Xue, Sen, 2013. "Economic reform, education expansion, and earnings inequality for urban males in China, 1988–2009," Journal of Comparative Economics, Elsevier, vol. 41(1), pages 227-244.
  4. Bjorn Gustafsson & Sai Ding, 2011. "Unemployment and the Rising Number of Non-Workers in Urban China: Causes and Distributional Consequences," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers 201117, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
  5. Tsun Se Cheong & Yanrui Wu, 2013. "Globalization and Regional Inequality," Economics Discussion / Working Papers 13-10, The University of Western Australia, Department of Economics.
  6. Johansson, Anders C. & Wang, Xun, 2012. "Financial Sector Policies, Poverty and Inequality," Working Paper Series 2012-24, China Economic Research Center, Stockholm School of Economics.
  7. Xing, Chunbing & Li, Shi, 2012. "Residual wage inequality in urban China, 1995–2007," China Economic Review, Elsevier, vol. 23(2), pages 205-222.
  8. Quheng Deng & Bjorn Gustafsson, 2011. "A New Episode of Increased Urban Income Inequality in China," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers 201116, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
  9. James Alm & Yongzheng Liu, 2014. "China's Tax-for-Fee Reform and Village Inequality," Oxford Development Studies, Taylor & Francis Journals, vol. 42(1), pages 38-64, March.

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