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Economic Reforms and Income Inequality in Urban China

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  • Okushima, Shinichiro
  • Uchimura, Hiroko
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    Abstract

    This paper reports the results of an analysis of changes in income inequality, and in its determinants, in urban China since the economic reforms that began in 1978. The intention is to identify new characteristics of economic inequality. It first shows that income differentials acrossand in provinces widened and that their economic rankings were becoming fixed during the period from 1988 to 1995. Second, age was the major factor in inequality in 1988, while education became the important factor in 1995. Third, education significantly contributed to increasing inequality during the period. Fourth, the higher education-level groups had less within-group inequality. These changes reflect the penetration of the market mechanism into China after the reforms. However, this will be problematic without equality of opportunity.

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    File URL: http://ir.ide.go.jp/dspace/bitstream/2344/181/3/ARRIDE_Discussion_No.25_okushima.pdf
    File Function: First version, 2005
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    Bibliographic Info

    Paper provided by Institute of Developing Economies, Japan External Trade Organization(JETRO) in its series IDE Discussion Papers with number 25.

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    Date of creation: Apr 2005
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    Publication status: Published in IDE Discussion Paper. No. 25. 2005.4
    Handle: RePEc:jet:dpaper:dpaper25

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    Related research

    Keywords: Asia; China; Income inequality; Economic reform; Education; Urban; Income distribution; Economic policy;

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    1. Theodore W. Schultz, 1962. "Reflections on Investment in Man," Journal of Political Economy, University of Chicago Press, vol. 70, pages 1.
    2. Aaberge, Rolf & Li, Xuezeng, 1997. "The Trend in Urban Income Inequality in Two Chinese Provinces, 1986-90," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 43(3), pages 335-55, September.
    3. Bourguignon, Francois, 1979. "Decomposable Income Inequality Measures," Econometrica, Econometric Society, vol. 47(4), pages 901-20, July.
    4. Jonathan Morduch & Terry Sicular, 2002. "Rethinking Inequality Decomposition, With Evidence from Rural China," Economic Journal, Royal Economic Society, vol. 112(476), pages 93-106, January.
    5. Knight, J. & Shi, L., 1991. "The Determinants of Educational Attainment in China," Economics Series Working Papers 99127, University of Oxford, Department of Economics.
    6. Fields, Gary S & Yoo, Gyeongjoon, 2000. "Falling Labor Income Inequality in Korea's Economic Growth: Patterns and Underlying Causes," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 46(2), pages 139-59, June.
    7. Kanbur, Ravi & Zhang, Xiaobo, 1999. "Which Regional Inequality? The Evolution of Rural-Urban and Inland-Coastal Inequality in China from 1983 to 1995," Journal of Comparative Economics, Elsevier, vol. 27(4), pages 686-701, December.
    8. Theodore W. Schultz, 1960. "Capital Formation by Education," Journal of Political Economy, University of Chicago Press, vol. 68, pages 571.
    9. Hussain, Athar & Lanjouw, Peter & Stern, Nicholas, 1994. "Income inequalities in China: Evidence from household survey data," World Development, Elsevier, vol. 22(12), pages 1947-1957, December.
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