Income Inequality During China's Economic Transition
AbstractThis paper provides an overview of the evolution of income inequality in China from 1987 to 2002, employing three series of data sets. Our focus is on both urban and rural inequality, as well as the urban-rural gap, with the objective of summarizing several “first-order” empirical patterns concerning the trajectory of inequality through the reform period. We document significant increases of inequality within China’s urban and rural populations. In rural areas, increased inequality is primarily related to the dis-equalizing role of non-agricultural self-employment income and slow growth in agricultural income from the mid-1990s onward. Poverty persists, and tied in part to slow growth in agricultural commodity prices. In urban areas, the declining role of subsidies and entitlements, the increase in wage inequality and the layoffs during restructuring, have fueled the growth in inequality within urban areas. Poverty levels, however, are very low. We find that spatial (regional) dimensions of inequality are significant, but are much less important than commonly believed for both the urban and rural populations, and for differences between urban and rural areas. Accounting for urban-rural reclassification, which otherwise exaggerates the rising urban-rural gap, we find a relatively stable ratio of urban to rural incomes. This hides some geographical variation, however: The urban-rural gap is increasing more rapidly in interior provinces, where SOE’s had a more dominant role in economic activity in urban areas, than in coastal provinces where the non-state sector was more important earlier in the reform period.
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 University of Toronto, Department of Economics in its series Working Papers with number tecipa-238.
Length: 54 pages
Date of creation: 01 Jul 2005
Date of revision:
Contact details of provider:
Postal: 150 St. George Street, Toronto, Ontario
Phone: (416) 978-5283
China; Income Distribution; Poverty; Inequality; welfare; transition; development;
Find related papers by JEL classification:
- I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
- P2 - Economic Systems - - Socialist Systems and Transition Economies
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
- D3 - Microeconomics - - Distribution
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-07-02 (All new papers)
- NEP-CNA-2006-07-02 (China)
- NEP-DEV-2006-07-02 (Development)
- NEP-SEA-2006-07-02 (South East Asia)
- NEP-TRA-2006-07-02 (Transition Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Benjamin, Dwayne & Brandt, Loren & Giles, John, 2005.
"The Evolution of Income Inequality in Rural China,"
Economic Development and Cultural Change,
University of Chicago Press, vol. 53(4), pages 769-824, July.
- Dwayne Benjamin & Loren Brandt & John Giles, 2004. "The Evolution of Income Inequality in Rural China," William Davidson Institute Working Papers Series 2004-654, William Davidson Institute at the University of Michigan.
- Dwayne Benjamin & Loren Brandt & John Giles, 2003. "The Evolution of Income Inequality in Rural China," Working Papers, University of Toronto, Department of Economics benjamin-04-01, University of Toronto, Department of Economics.
- Dwayne Benjamin & Loren Brandt & Paul Glewwe & Li Guo, 2000.
"Markets, Human Capital, and Inequality: Evidence from Rural China,"
Working Papers, University of Toronto, Department of Economics
benjamin-00-01, University of Toronto, Department of Economics.
- Dwayne Benjamin & Loren Brandt & Paul Glewwe & Li Guo, 2000. "Markets, Human Capital, and Inequality: Evidence from Rural China," William Davidson Institute Working Papers Series 298, William Davidson Institute at the University of Michigan.
- Loren Brandt & Dwayne Benjamin, 1999. "Markets and Inequality in Rural China: Parallels with the Past," American Economic Review, American Economic Association, American Economic Association, vol. 89(2), pages 292-295, May.
- Keith Griffin & Azizur Rahman Khan & Carl Riskin, 1999. "Income Distribution in Urban China during the Period of Economic Reform and Globalization," American Economic Review, American Economic Association, American Economic Association, vol. 89(2), pages 296-300, May.
- Ravallion, Martin & Shaohua Chen, 2004.
"China's (uneven) progress against poverty,"
Policy Research Working Paper Series
3408, The World Bank.
- Shorrocks, Anthony F, 1983. "The Impact of Income Components on the Distribution of Family Incomes," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 98(2), pages 311-26, May.
- Xin Meng, 2004. "Economic Restructuring and Income Inequality in Urban China," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 50(3), pages 357-379, 09.
- "Rawski, Thomas G.", 1982. "The Simple Arithmetic of Chinese Income Distribution," Economic Review, Hitotsubashi University, Hitotsubashi University, vol. 33(1), pages 12-26, January.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (RePEc Maintainer).
If references are entirely missing, you can add them using this form.