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Mind the gaps: a political economy of the multiple dimensions of China’s rural–urban divide

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  • Xiaobing Wang
  • Jenifer Piesse
  • Nick Weaver
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    Abstract

    China’s impressive growth has been accompanied by increasing inequality and a widening rural– urban divide. This paper identifies and examines nine major dimensions of this divide: income, consumption, education, healthcare, employment, child care, pensions, access to public services and environment. The paper attributes the main causes of the rural–urban divide to China’s development strategy and the associated regressive tax and subsidies policies. This paper is among the first to evaluate and decompose the rural–urban divide into multiple dimensions or gaps, and highlights the severe constraints on the Chinese peasantry. It discuses the policy and welfare implications of the rural–urban divide. It argues that the large size of the rural–urban divide was mainly due to inequality in opportunities and the lack of social provision of public goods in rural areas. The removal of discriminatory policies, including the provision of such public goods, will lead to greater equality of opportunity and a reduced gap. Increased equality and efficiency can be achieved simultaneously.

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    File URL: http://www.bwpi.manchester.ac.uk/medialibrary/publications/working_papers/bwpi-wp-15211.pdf
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    Bibliographic Info

    Paper provided by BWPI, The University of Manchester in its series Brooks World Poverty Institute Working Paper Series with number 15211.

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    Date of creation: 2011
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    Handle: RePEc:bwp:bwppap:15211

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    1. Sicular, Terry & Yue, Ximing & Gustafsson, Bjorn & Li, Shi, 2006. "The Urban-Rural Income Gap and Inequality in China," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) RP2006/135, World Institute for Development Economic Research (UNU-WIDER).
    2. Knight, John & Song, Lina, 1999. "The Rural-Urban Divide: Economic Disparities and Interactions in China," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780198293309, October.
    3. Knight, John & Song, Lina, 2006. "Towards a Labour Market in China," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780199215553, October.
    4. Edward C. Prescott, 2004. "Why Do Americans Work So Much More Than Europeans?," Levine's Bibliography 122247000000000413, UCLA Department of Economics.
    5. Gustafsson, Bjorn & Shi, Li, 1997. "Types of Income and Inequality in China at the End of the 1980s," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 43(2), pages 211-26, June.
    6. Fung Kwan, 2009. "Agricultural labour and the incidence of surplus labour: experience from China during reform," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 7(3), pages 341-361.
    7. Jiandong Chen & Dai Dai & Ming Pu & Wenxuan Hou & Qiaobin Feng, 2010. "The trend of the Gini coefficient of China," Brooks World Poverty Institute Working Paper Series, BWPI, The University of Manchester 10910, BWPI, The University of Manchester.
    8. Dong, Keyong, 2009. "Medical insurance system evolution in China," China Economic Review, Elsevier, Elsevier, vol. 20(4), pages 591-597, December.
    9. Salanié, Bernard, 2011. "The Economics of Taxation," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262016346, December.
    10. Lin, Justin Yifu, 1990. "Collectivization and China's Agricultural Crisis in 1959-1961," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 98(6), pages 1228-52, December.
    11. Xiaobing Wang & Jenifer Piesse, 2010. "Inequality and the Urban-rural Divide in China: Effects of Regressive Taxation," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 18(6), pages 36-55.
    12. Ravallion, Martin & Shaohua Chen, 2004. "China's (uneven) progress against poverty," Policy Research Working Paper Series 3408, The World Bank.
    13. Simon Appleton & John Knight & Lina Song & Qingjie Xia, 2004. "Contrasting paradigms: segmentation and competitiveness in the formation of the chinese labour market," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 2(3), pages 185-205.
    14. Chang, Gene H., 2002. "The cause and cure of China's widening income disparity," China Economic Review, Elsevier, Elsevier, vol. 13(4), pages 335-340, December.
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