Sources of income differences across Chinese provinces during the reform period: a development accounting exercise
AbstractChina's rapid and uneven growth since 1978 has not eliminated but even re- inforced the persistent income inequality across provinces. While existing literature focuses mainly on the provincial variation in growth performance using cross-province growth regressions or growth accounting, few efforts has been made to directly study the differences in income levels across provinces. This paper explores the proximate causes of cross-province income differences in the framework of development accounting. Rather than assuming a priori values for output elasticities of capital and labor, we estimate them from an aggregate production function using panel data. The accounting results show that differences in total factor productivity (TFP) and in physical capital intensity are both important sources of cross-province income differences, each accounting for roughly half of the variation of income levels.Differences in human capital accumulation explain only a small amount of income differences across provinces. The results are robust to whether or not the assumption of constant returns to scale is imposed, and are valid in the long run. We do not exclude the possibility that interaction between factor accumulation and TFP plays an important role in determining cross-province income differences.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by HAL in its series Working Papers with number halshs-00557001.
Date of creation: 18 Jan 2011
Date of revision:
Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00557001/en/
Contact details of provider:
Web page: http://hal.archives-ouvertes.fr/
Income differences; Development accounting; China;
Other versions of this item:
- Rui HAO & Zheng WEI, 2009. "Sources Of Income Differences Across Chinese Provinces During The Reform Period: A Development Accounting Exercise," The Developing Economies, Institute of Developing Economies, vol. 47(1), pages 1-29.
- Rui HAO, 2007. "Sources of income differences across Chinese provinces during the reform period: a development accounting exercise," Working Papers 200723, CERDI.
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Farhad Noorbakhsh & Zhikai Wang, 2010. "Interprovincial disparities in China since the reforms: convergence or divergence?," Working Papers 2010_11, Business School - Economics, University of Glasgow.
- 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.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD).
If references are entirely missing, you can add them using this form.