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China's Income Distribution and Inequality

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  • Jeffrey M. Perloff
  • Ximing Wu

Abstract

We use a new method to estimate China’s income distributions based on publicly available interval summary statistics from China’s largest national household survey. We examine rural, urban, and overall income distributions for each year from 1985-2001. By estimating the entire distributions, we can show how the distributions change directly as well as examine trends in traditional welfare indices such as the Gini. We find that inequality has increased substantially in both rural and urban areas. Using an inter-temporal decomposition of aggregate inequality, we determine that increases in inequality within the rural and urban sectors and the growing gap in rural and urban incomes have been equally responsible for the growth in overall inequality over the last two decades. However, the rural-urban income gap has played an increasingly important role in recent years. In contrast, only the growth of inequality within rural and urban areas is responsible for the increase in inequality in the United States, where the overall inequality is close to that of China. As a robustness check, we show that consumption inequality (which may be a proxy for permanent income inequality) in urban areas also rose considerably

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File URL: http://repec.org/esNASM04/up.30985.1075445708.pdf
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Bibliographic Info

Paper provided by Econometric Society in its series Econometric Society 2004 North American Summer Meetings with number 316.

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Date of creation: 11 Aug 2004
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Handle: RePEc:ecm:nasm04:316

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Related research

Keywords: income distribution; inequality; maximum entropy;

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  1. Bruno, Michael & Ravallion, Martin & Squire, Lyn, 1996. "Equity and growth in developing countries : old and new perspectives on the policy issues," Policy Research Working Paper Series 1563, The World Bank.
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Cited by:
  1. Wu, Ximing & Perloff, Jeffrey M., 2005. "GMM Estimation of a Maximum Distribution With Interval Data," Institute for Research on Labor and Employment, Working Paper Series qt7jf5w1ht, Institute of Industrial Relations, UC Berkeley.
  2. Alberto, Gabriele & Schettino, Francesco, 2006. "Child Mortality In China And Vietnam In A Comparative Perspective," MPRA Paper 3987, University Library of Munich, Germany, revised Dec 2006.
  3. Francesco Schettino & Alberto Gabriele, 2008. "Child malnutrition and mortality in China and Vietnam in a comparative perspective," Economic Change and Restructuring, Springer, vol. 41(1), pages 29-59, March.
  4. Lee, Jongchul, 2013. "A provincial perspective on income inequality in urban China and the role of property and business income," China Economic Review, Elsevier, vol. 26(C), pages 140-150.

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