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Decomposing Income Inequality and Policy Implications in Rural China

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  • Lerong Yu
  • Renfu Luo
  • Linxiu Zhang

Abstract

Using village data from samples covering 6 provinces, 36 counties and 216 townships, the income inequalities within and between townships in rural China are assessed. The Theil index and the mean logarithmic deviation methods enable us to test income inequality at the township level, and to decompose it into intra‐regional and inter‐regional at county and provincial levels. In the present paper, we also decompose income inequalities between and within the nationally designated poor counties (NDPC). The results show that approximately two‐thirds of the income inequality in rural China would be eliminated if measures and policies were targeted at the county level. This study also confirms the rationale that China's poverty alleviation strategy of focusing on poor counties based on the inequalities between NDPC and non‐NDPC accounts for the most inter‐province inequality.

Suggested Citation

  • Lerong Yu & Renfu Luo & Linxiu Zhang, 2007. "Decomposing Income Inequality and Policy Implications in Rural China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 15(2), pages 44-58, March.
  • Handle: RePEc:bla:chinae:v:15:y:2007:i:2:p:44-58
    DOI: 10.1111/j.1749-124X.2007.00060.x
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    File URL: https://doi.org/10.1111/j.1749-124X.2007.00060.x
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    References listed on IDEAS

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    1. C. Cindy Fan, 1997. "Uneven development and beyond: regional development theory in post‐Mao China," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 21(4), pages 620-639, December.
    2. Rozelle Scott, 1994. "Rural Industrialization and Increasing Inequality: Emerging Patterns in China's Reforming Economy," Journal of Comparative Economics, Elsevier, vol. 19(3), pages 362-391, December.
    3. Gustafsson, Bjorn & Shi, Li, 2002. "Income inequality within and across counties in rural China 1988 and 1995," Journal of Development Economics, Elsevier, vol. 69(1), pages 179-204, October.
    4. Lyons, Thomas P, 1991. "Interprovincial Disparities in China: Output and Consumption, 1952-1987," Economic Development and Cultural Change, University of Chicago Press, vol. 39(3), pages 471-506, April.
    5. Lee, Jongchul, 2000. "Changes in the source of China's regional inequality," China Economic Review, Elsevier, vol. 11(3), pages 232-245.
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    Cited by:

    1. Kang Ernest Liu & Hung-Hao Chang & Wen S. Chern, 2011. "Examining changes in fresh fruit and vegetable consumption over time and across regions in urban China," China Agricultural Economic Review, Emerald Group Publishing, vol. 3(3), pages 276-296, September.
    2. Li, Yuheng, 2012. "Rural Household Income in China: Spatial-Temporal Disparity and Its Interpretation," Working Paper Series 2012-21, Stockholm School of Economics, China Economic Research Center.
    3. GOH, Chor-ching & LUO, Xubei & ZHU, Nong, 2009. "Income growth, inequality and poverty reduction: A case study of eight provinces in China," China Economic Review, Elsevier, vol. 20(3), pages 485-496, September.
    4. Mehtabul Azam & Vipul Bhatt, 2018. "Spatial Income Inequality in India, 1993–2011: A Decomposition Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 138(2), pages 505-522, July.
    5. Luo, Xubei & Zhu, Nong, 2008. "Rising income inequality in China : a race to the top," Policy Research Working Paper Series 4700, The World Bank.

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