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Non-agricultural Employment Determinants and Income Inequality Decomposition

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Non-agricultural income has become an important source of rural household income and has brought with a wide inequality in rural China. This paper investigates the determinants of non-agricultural employment as well as non-agricultural income and then assesses the contribution of these determinants to income inequality with the Chinese Academy of Social Science 2003 survey data and a three-step decomposition approach. Our results indicate that education inequality accounts for 9% and 36% wage and self-employment income inequality respectively which implies that education inequality plays substantial roles in non-agricultural income inequalities. The community characteristics collectively accounts for 46% and 32% of the wage and self-employment income inequality respectively which in turn suggests that regional development is of great importance in the determination of non-agricultural income inequality.

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Paper provided by University of Western Ontario, Economic Policy Research Institute in its series University of Western Ontario, Economic Policy Research Institute Working Papers with number 20086.

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Date of creation: 2008
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Handle: RePEc:uwo:epuwoc:20086

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Postal: Economic Policy Research Institute, Social Science Centre, University of Western Ontario, London, Ontario, Canada N6A 5C2
Phone: 519-661-2111 Ext.85244
Web page: http://economics.uwo.ca/research/research_papers/epri_workingpapers.html

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Keywords: non-agricultural income; employment; inequality;

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  1. Dwayne Benjamin & Loren Brandt & John Giles, 2003. "The Evolution of Income Inequality in Rural China," Working Papers benjamin-04-01, University of Toronto, Department of Economics.
  2. Du, Yang & Park, Albert & Wang, Sangui, 2005. "Migration and rural poverty in China," Journal of Comparative Economics, Elsevier, vol. 33(4), pages 688-709, December.
  3. Zhang, Linxiu & Rozelle, Scott & Huang, Jikun, 2001. "Off-Farm Jobs and On-Farm Work in Periods of Boom and Bust in Rural China," Journal of Comparative Economics, Elsevier, vol. 29(3), pages 505-526, September.
  4. John Knight & Lina Song, 2003. "Chinese Peasant Choices: Migration, Rural Industry or Farming," Oxford Development Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 31(2), pages 123-148.
  5. Jonathan Morduch & Terry Sicular, 1998. "Rethinking Inequality Decomposition, with Evidence from Rural China," Harvard Institute of Economic Research Working Papers 1831, Harvard - Institute of Economic Research.
  6. Puhani, Patrick A, 2000. " The Heckman Correction for Sample Selection and Its Critique," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 14(1), pages 53-68, February.
  7. Christofides, Louis N. & Pashardes, Panos, 2002. "Self/paid-employment, public/private sector selection, and wage differentials," Labour Economics, Elsevier, Elsevier, vol. 9(6), pages 737-762, December.
  8. de Brauw, Alan & Huang, Jikun & Rozelle, Scott & Zhang, Linxiu & Zhang, Yigang, 2002. "The Evolution of China's Rural Labor Markets During the Reforms," Journal of Comparative Economics, Elsevier, vol. 30(2), pages 329-353, June.
  9. Kai-yuen, Tsui, 1998. "Trends and Inequalities of Rural Welfare in China: Evidence from Rural Households in Guangdong and Sichuan," Journal of Comparative Economics, Elsevier, vol. 26(4), pages 783-804, December.
  10. meng, xin & wu, harry, 1994. "Household Income Determination and Regional Income Differential in Rural China," MPRA Paper 1345, University Library of Munich, Germany.
  11. Wan, Guanghua, 2004. "Accounting for income inequality in rural China: a regression-based approach," Journal of Comparative Economics, Elsevier, vol. 32(2), pages 348-363, June.
  12. Adams, Richard H., 2001. "Nonfarm income, inequality, and poverty in rural Egypt and Jordan," Policy Research Working Paper Series 2572, The World Bank.
  13. 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.
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Cited by:
  1. Chloe Duvivier & Mary-Françoise Renard & Shi Li, 2012. "Are workers close to cities paid higher non-agricultural wages in rural China?," Working Papers halshs-00673698, HAL.
  2. Tsun Se Cheong & Yanrui Wu, 2013. "Globalization and Regional Inequality," Economics Discussion / Working Papers, The University of Western Australia, Department of Economics 13-10, The University of Western Australia, Department of Economics.

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