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Rising regional inequality in China: Policy regimes and structural changes

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  • Chun‐Yu Ho
  • Dan Li

Abstract

. Regional inequality is severe in China since regional development is uneven due to various initial conditions and government policies. We employ unit root tests allowing for structural breaks to alternative inequality measures from 1952 to 2000. Empirical results indicate that (1) the regional inequality is trend stationary with structural breaks rather than following a random walk. Thus, ignoring structural changes might leads to incorrect inference and misleading policy implications; (2) the break points are associated with episodic events in Chinese economic history such as the Cultural Revolution and market reforms. This implies that the policies had a long‐lasting and fundamental effect on the inequality. Resumen. La desigualdad regional en China es pronunciada debido a un desarrollo regional dispar causado por un número de condiciones iniciales y políticas gubernamentales. Empleamos pruebas de raíz unitaria que permiten rupturas estructurales (structural breaks) en medidas de desigualdad alternativas desde 1952 al 2000. Los resultados empíricos indican que (1) la desigualdad regional es de tendencia estacionaria con rupturas estructurales en lugar de seguir un paseo aleatorio (random walk). Por tanto, el ignorar cambios estructurales podría llevar a una inferencia incorrecta e implicaciones políticas engañosas; (2) los puntos de ruptura están asociados con acontecimientos episódicos de la historia económica china como la Revolución cultural y las reformas del mercado. Esto implica que las políticas tuvieron un efecto duradero y fundamental en la desigualdad.

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  • Chun‐Yu Ho & Dan Li, 2008. "Rising regional inequality in China: Policy regimes and structural changes," Papers in Regional Science, Wiley Blackwell, vol. 87(2), pages 245-259, June.
    • Handle: RePEc:bla:presci:v:87:y:2008:i:2:p:245-259
    DOI: 10.1111/j.1435-5957.2008.00171.x
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    Cited by:

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    2. Chun‐Yu Ho & Dan Li, 2010. "Spatial Dependence and Divergence across Chinese Cities," Review of Development Economics, Wiley Blackwell, vol. 14(2), pages 386-403, May.
    3. Bian, Zhicun & Ma, Jun & Ni, Jinlan & Stewart, Shamar, 2020. "Synchronization of regional growth dynamics in China," China Economic Review, Elsevier, vol. 61(C).
    4. Brantly Callaway & Tong Li & Joel Rodrigue & Yuya Sasaki & Yong Tan, 2024. "Regulation, Emissions and Productivity: Evidence from China’s Eleventh Five-Year Plan," Staff Working Papers 24-7, Bank of Canada.
    5. Guangdong Li & Chuanglin Fang, 2014. "Analyzing the multi-mechanism of regional inequality in China," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 52(1), pages 155-182, January.
    6. José Villaverde & Adolfo Maza, 2012. "Chinese per Capita Income Distribution, 1992–2007: A Regional Perspective," Asian Economic Journal, East Asian Economic Association, vol. 26(4), pages 313-331, December.
    7. Guangdong Li & Chuanglin Fang, 2018. "Spatial Econometric Analysis of Urban and County-level Economic Growth Convergence in China," International Regional Science Review, , vol. 41(4), pages 410-447, July.
    8. 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 Limited, vol. 3(3), pages 276-296, September.
    9. Emanuele Felice & Iacopo Odoardi & Dario D’Ingiullo, 2023. "The Chinese Inland-Coastal Inequality: The Role of Human Capital and the 2007–2008 Crisis Watershed," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 9(2), pages 761-788, July.

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    More about this item

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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