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Rising Regional Inequality in China:Policy Regimes and Structural Changes

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  • Chun- Yu Ho

    ()
    (Department of Economics, Boston University)

  • Dan Li

    ()
    (Department of Economics, Boston University)

Abstract

Regional inequality is severe in China since regional development is uneven due to various initial conditions and government policies. We employ unit root tests allowing for structural breaks to alternative inequality measures from 1952 to 2000. Empirical results indicate that (1) the regional inequality is trend stationary with structural breaks rather than follow a random walk. Thus, ignoring structural changes might induce incorrect inference and misleading policy implications; (2) the break points are associated with episodic events in Chinese economic history such as the Cultural Revolution and market reforms. It implies that the policies had a long-lasting and fundamental effect on the inequality.

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Bibliographic Info

Paper provided by Boston University - Department of Economics in its series Boston University - Department of Economics - Working Papers Series with number WP2007-013.

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Length: 19pages
Date of creation: Feb 2007
Date of revision:
Handle: RePEc:bos:wpaper:wp2007-013

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Keywords: Structural break; unit root; inequality; China;

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Cited by:
  1. Kang Ernest Liu & Hung-Hao Chang & Wen S. Chern, 2011. "Examining changes in fresh fruit and vegetable consumption over time and across regions in urban China," China Agricultural Economic Review, Emerald Group Publishing, vol. 3(3), pages 276-296, September.
  2. M. J. Herrerias & Javier Ordoñez, 2011. "New Evidence on the Role of Regional Clusters and Convergence in China (1952-2008)," Working Papers 2011/07, Economics Department, Universitat Jaume I, Castellón (Spain).
  3. Guangdong Li & Chuanglin Fang, 2014. "Analyzing the multi-mechanism of regional inequality in China," The Annals of Regional Science, Springer, vol. 52(1), pages 155-182, January.

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