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Globalization and Regional Income Inequality--Evidence from within China

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  • Guanghua Wan

    (UNU-WIDER, Helsinki, Finland)

  • Ming Lu

    (Employment & Social Security Research Center, & China Center for Economic Studies, Fudan University)

  • Zhao Chen

    (China Center for Economic Studies, Fudan University)

Abstract

China¡¯s recent accession to the WTO is expected to accelerate its integration into the world economy, which aggravates concerns over the impact of globalization on the already rising inter-region income inequality in China. This paper discusses China¡¯s globalization process and estimates an income generating function, incorporating trade and FDI variables. It then applies the newly developed Shapley value decomposition technique to quantify the contributions of globalization, along with other variables, to regional inequality. It is found that (a) globalization constitutes a positive and substantial share to regional inequality and the share rises over time; (b) capital is one of the largest and increasingly important contributor to regional inequality; (c) economic reform characterized by privatization exerts a significant impact on regional inequality; and (d) the relative contributions of education, location, urbanization and dependency ratio to regional inequality have been declining.

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File URL: http://128.118.178.162/eps/em/papers/0511/0511014.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Econometrics with number 0511014.

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Length: 28 pages
Date of creation: 16 Nov 2005
Date of revision:
Handle: RePEc:wpa:wuwpem:0511014

Note: Type of Document - pdf; pages: 28
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Web page: http://128.118.178.162

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References

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  1. Xavier Sala-i-Martin, 2002. "The Disturbing "Rise" of Global Income Inequality," NBER Working Papers 8904, National Bureau of Economic Research, Inc.
  2. Xavier Sala-i-Martin, 2002. "The world distribution of income (estimated from individual country distributions)," Discussion Papers 0102-58, Columbia University, Department of Economics.
  3. Ben-David, Dan, 1993. "Equalizing Exchange: Trade Liberalization and Income Convergence," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 653-79, August.
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Cited by:
  1. Zhang, Yin & Wan, Guanghua, 2006. "Globalization and the Urban Poor in China," Working Paper Series RP2006/42, World Institute for Development Economic Research (UNU-WIDER).
  2. Wan, Guanghua & Lu, Ming & Chen, Zhao, 2006. "The inequality-growth nexus in the short and long run: Empirical evidence from China," Journal of Comparative Economics, Elsevier, vol. 34(4), pages 654-667, December.
  3. Zhang, Xiaobo, 2006. "Fiscal Decentralization and Political Centralization in China: Implications for Growth and Inequality," Working Paper Series RP2006/93, World Institute for Development Economic Research (UNU-WIDER).
  4. Zhao Chen & Yu Jin & Ming Lu, 2005. "Economic Opening and Industrial agglomeration in China," Industrial Organization 0511012, EconWPA.
  5. Kris James Mitchener & Se Yan, 2010. "Globalization, Trade & Wages: What Does History tell us about China?," NBER Working Papers 15679, National Bureau of Economic Research, Inc.

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