IDEAS home Printed from https://ideas.repec.org/a/bla/jecsur/v28y2014i4p686-708.html
   My bibliography  Save this article

Income Inequality In The People'S Republic Of China: Trends, Determinants, And Proposed Remedies

Author

Listed:
  • Iris Claus
  • Les Oxley
  • Chen Wang
  • Guanghua Wan
  • Dan Yang

Abstract

The issue of income inequality in the People's Republic of China (PRC) has attracted world-wide attention, leading to a sizable literature. This paper attempts to provide a nonexhaustive literature review of the PRC's inequality trends and determinants, and suggested government interventions. It discusses profiles of income inequality along three dimensions: interhousehold disparity, regional divides, and urban–rural gaps. This is followed by an exploration of the driving forces behind rising inequality, including the notorious hukou system, policy biases, location or geographic factors, globalization, and education. Finally, the paper summarizes and proposes government interventions for containing or reducing income inequality in the PRC. Important areas for future research are also suggested in the final section of the paper.

Suggested Citation

  • Iris Claus & Les Oxley & Chen Wang & Guanghua Wan & Dan Yang, 2014. "Income Inequality In The People'S Republic Of China: Trends, Determinants, And Proposed Remedies," Journal of Economic Surveys, Wiley Blackwell, vol. 28(4), pages 686-708, September.
  • Handle: RePEc:bla:jecsur:v:28:y:2014:i:4:p:686-708
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1111/joes.12077
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Guanghua Wan & Zhangyue Zhou, 2005. "Income Inequality in Rural China: Regression‐based Decomposition Using Household Data," Review of Development Economics, Wiley Blackwell, vol. 9(1), pages 107-120, February.
    2. Kailei Wei & Shujie Yao & Aying Liu, 2009. "Foreign Direct Investment and Regional Inequality in China," Review of Development Economics, Wiley Blackwell, vol. 13(4), pages 778-791, November.
    3. Chen, Jian & Fleisher, Belton M., 1996. "Regional Income Inequality and Economic Growth in China," Journal of Comparative Economics, Elsevier, vol. 22(2), pages 141-164, April.
    4. Qinghua Zhang & Heng-fu Zou, 2012. "Regional Inequality in Contemporary China," Annals of Economics and Finance, Society for AEF, vol. 13(1), pages 113-137, May.
    5. John Whalley & Shunming Zhang, 2011. "A Numerical Simulation Analysis Of (Hukou) Labour Mobility Restrictions In China," World Scientific Book Chapters, in: John Whalley (ed.),China's Integration Into The World Economy, chapter 11, pages 295-324, World Scientific Publishing Co. Pte. Ltd..
    6. Branko Milanovic, 2005. "Can We Discern the Effect of Globalization on Income Distribution? Evidence from Household Surveys," World Bank Economic Review, World Bank Group, vol. 19(1), pages 21-44.
    7. Nong Zhu & Xubei Luo, 2010. "The impact of migration on rural poverty and inequality: a case study in China," Agricultural Economics, International Association of Agricultural Economists, vol. 41(2), pages 191-204, March.
    8. Dennis Tao Yang & Hao Zhou, 1999. "Rural-urban disparity and sectoral labour allocation in China," Journal of Development Studies, Taylor & Francis Journals, vol. 35(3), pages 105-133.
    9. Ravi Kanbur & Xiaobo Zhang, 2005. "Fifty Years of Regional Inequality in China: a Journey Through Central Planning, Reform, and Openness," Review of Development Economics, Wiley Blackwell, vol. 9(1), pages 87-106, February.
    10. Zhang Y. Zhou & John L. Dillon & Guang H. Wan, 1992. "Development of township enterprise and alleviation of the employment problem in rural China," Agricultural Economics, International Association of Agricultural Economists, vol. 6(3), pages 201-215, February.
    11. Zhao Chen & Ming Lu & Guanghua Wan, 2010. "Inter-Industry Wage Differentials: An Increasingly Important Contributor to Urban China Income Inequality," Global COE Hi-Stat Discussion Paper Series gd09-130, Institute of Economic Research, Hitotsubashi University.
    12. Demurger, Sylvie & Fournier, Martin & Li, Shi, 2006. "Urban income inequality in China revisited (1988-2002)," Economics Letters, Elsevier, vol. 93(3), pages 354-359, December.
    13. Li, Hongbin & Zhu, Yi, 2006. "Income, income inequality, and health: Evidence from China," Journal of Comparative Economics, Elsevier, vol. 34(4), pages 668-693, December.
    14. Shuming Bao & Örn B. Bodvarsson & Jack W. Hou & Yaohui Zhao, 2011. "The Regulation Of Migration In A Transition Economy: China'S Hukou System," Contemporary Economic Policy, Western Economic Association International, vol. 29(4), pages 564-579, October.
    15. Guanghua Wan & Ming Lu & Zhao Chen, 2007. "Globalization And Regional Income Inequality: Empirical Evidence From Within China," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 53(1), pages 35-59, March.
    16. Donggen Wang & Li Zhang, 2003. "Knowledge Disparity and Regional Inequality in Post-reform China," Post-Communist Economies, Taylor & Francis Journals, vol. 15(3), pages 383-400.
    17. Zhao, Yaohui, 1999. "Labor Migration and Earnings Differences: The Case of Rural China," Economic Development and Cultural Change, University of Chicago Press, vol. 47(4), pages 767-782, July.
    18. Dapeng Hu & Masahisa Fujita, 2001. "Regional disparity in China 1985-1994: The effects of globalization and economic liberalization," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 35(1), pages 3-37.
    19. Zhang, Yin & Wan, Guanghua, 2006. "The impact of growth and inequality on rural poverty in China," Journal of Comparative Economics, Elsevier, vol. 34(4), pages 694-712, December.
    20. Lardy,Nicholas R., 1978. "Economic Growth and Distribution in China," Cambridge Books, Cambridge University Press, number 9780521219044.
    21. Xiaoyun Liu & Terry Sicular, 2009. "Nonagricultural Employment Determinants and Income Inequality Decomposition," Chinese Economy, Taylor & Francis Journals, vol. 42(4), pages 29-43, July.
    22. Song, Shunfeng & Chu, George S. -F. & Chao, Rongqing, 2000. "Intercity regional disparity in China," China Economic Review, Elsevier, vol. 11(3), pages 246-261.
    23. Terry Sicular & Yue Ximing & Björn Gustafsson & Li Shi, 2007. "The Urban–Rural Income Gap And Inequality In China," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 53(1), pages 93-126, March.
    24. Belton M. Fleisher & Haizheng Li & Shi Li & Xiaojun Wang, 2000. "Sorting, Selection, and Transformation of the Return to College Education In China," William Davidson Institute Working Papers Series wp756, William Davidson Institute at the University of Michigan.
    25. Wei Zou & Fen Zhang & Ziyin Zhuang & Hairong Song, 2008. "Transport Infrastructure, Growth, and Poverty Alleviation: Empirical Analysis of China," Annals of Economics and Finance, Society for AEF, vol. 9(2), pages 345-371, November.
    26. 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.
    27. Wan , Guanghua & Sebastian, Iva, 2011. "Poverty in Asia and the Pacific: An Update," ADB Economics Working Paper Series 267, Asian Development Bank.
    28. Anthony Shorrocks & Guanghua Wan, 2005. "Spatial decomposition of inequality," Journal of Economic Geography, Oxford University Press, vol. 5(1), pages 59-81, January.
    29. Poncet, Sandra, 2003. "Measuring Chinese domestic and international integration," China Economic Review, Elsevier, vol. 14(1), pages 1-21.
    30. Sridhar, Kala Seetharam & Wan, Guanghua, 2010. "Firm location choice in cities: Evidence from China, India, and Brazil," China Economic Review, Elsevier, vol. 21(1), pages 113-122, March.
    31. Chunli Shen & Jing Jin & Heng-fu Zou, 2012. "Fiscal Decentralization in China: History, Impact, Challenges and Next Steps," Annals of Economics and Finance, Society for AEF, vol. 13(1), pages 1-51, May.
    32. 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.
    33. Lei Ding & Kingsley Haynes & Yanchun Liu, 2008. "Telecommunications infrastructure and regional income convergence in China: panel data approaches," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 42(4), pages 843-861, December.
    34. Cai, Fang & Wang, Dewen & Du, Yang, 2002. "Regional disparity and economic growth in China: The impact of labor market distortions," China Economic Review, Elsevier, vol. 13(2-3), pages 197-212.
    35. 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.
    36. Wei Chi & Xiaoye Qian, 2010. "The role of education in regional innovation activities: spatial evidence from China," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 15(4), pages 396-419.
    37. Xiaowen Tian & Vai Io Lo & Shuanglin Lin & Shunfeng Song, 2011. "Cross-region FDI productivity spillovers in transition economies: evidence from China," Post-Communist Economies, Taylor & Francis Journals, vol. 23(1), pages 105-118.
    38. Guanghua Wan, 2007. "Understanding Regional Poverty And Inequality Trends In China: Methodological Issues And Empirical Findings," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 53(1), pages 25-34, March.
    39. Wan, Guanghua (ed.), 2008. "Inequality and Growth in Modern China," OUP Catalogue, Oxford University Press, number 9780199535194.
    40. Rui Hao & Zheng Wei, 2010. "Fundamental causes of inland–coastal income inequality in post-reform China," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 45(1), pages 181-206, August.
    41. 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.
    42. Ajit S. Bhalla & Shujie Yao & Zongyi Zhang, 2003. "Causes of inequalities in China, 1952 to 1999," Journal of International Development, John Wiley & Sons, Ltd., vol. 15(8), pages 939-955.
    43. Wim Vijverberg & Feng-Cheng Fu & Chu-Ping Vijverberg, 2011. "Public infrastructure as a determinant of productive performance in China," Journal of Productivity Analysis, Springer, vol. 36(1), pages 91-111, August.
    44. Xiaobing Wang & Jenifer Piesse, 2010. "Inequality and the Urban–rural Divide in China: Effects of Regressive Taxation," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 18(6), pages 36-55, November.
    45. Xiaobo Zhang & Kevin Zhang, 2003. "How Does Globalisation Affect Regional Inequality within A Developing Country? Evidence from China," Journal of Development Studies, Taylor & Francis Journals, vol. 39(4), pages 47-67.
    46. Wan, Guang Hua, 2001. "Changes in regional inequality in rural China: decomposing the Gini index by income sources," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 45(3), pages 1-21.
    47. 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.
    48. Nolan, Peter, 1979. "Inequality of income between town and countryside in the People's Republic of China in the mid-1950s," World Development, Elsevier, vol. 7(4-5), pages 447-465.
    49. Guanghua Wan, 2008. "Introduction to the Special Section: Poverty and Inequality in China," Review of Development Economics, Wiley Blackwell, vol. 12(2), pages 416-418, May.
    50. Shi Li & Chuliang Luo & Terry Sicular, 2011. "Overview: Income Inequality and Poverty in China, 2002-2007," University of Western Ontario, Centre for Human Capital and Productivity (CHCP) Working Papers 201110, University of Western Ontario, Centre for Human Capital and Productivity (CHCP).
    51. Minjia Chen & Yongnian Zheng, 2008. "China's Regional Disparity and Its Policy Responses," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 16(4), pages 16-32, July.
    52. Fu, Xiaolan, 2004. "Limited linkages from growth engines and regional disparities in China," Journal of Comparative Economics, Elsevier, vol. 32(1), pages 148-164, March.
    53. Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, vol. 50(1), pages 193-211, January.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jecsur:v:28:y:2014:i:4:p:686-708. See general 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: (Wiley Content Delivery). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0950-0804 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.