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Forces Shaping China'S Interprovincial Inequality

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  • Kai-yuen Tsui

Abstract

This paper explores the forces that shaped China's interprovincial inequality in the last five decades of Communist rule. In so far as the change in interprovincial inequality is the result of differential growth in provincial GDP per capita and provincial economic growth, it may be decomposed into contributions by total factor productivity (TFP) and other factor inputs. A new method is introduced to make this decomposition. Care is exercised in taking into account problems of Chinese official data when implementing the decomposition analysis. The findings suggest that TFP and factor inputs exerted different and sometimes opposing effects on interprovincial inequality in the Maoist and reform era. The increase in inequality from the mid 1960s to the mid 1970s is due to the contribution of TFP overwhelming that of physical capital. The opposite is true for the 1980s. The increase in the 1990s is mainly driven by the skewed distribution of investments in favor of the richer coastal provinces reinforced by the increasing contribution of TFP. Copyright © 2007 The Author; Journal compilation © International Association for Research in Income and Wealth 2007.

Suggested Citation

  • Kai-yuen Tsui, 2007. "Forces Shaping China'S Interprovincial Inequality," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 53(1), pages 60-92, March.
  • Handle: RePEc:bla:revinw:v:53:y:2007:i:1:p:60-92
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    Cited by:

    1. Zheng Lu & Xiang Deng, 2013. "Regional Policy And Regional Development: A Case Study Of China‘S Western Development Strategy," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 1(15), pages 1-21.
    2. Li, Chao & Gibson, John, 2013. "Rising Regional Inequality in China: Fact or Artifact?," World Development, Elsevier, vol. 47(C), pages 16-29.
    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. Noorbakhsh, Farhad & Wang, Zhikai, 2010. "Interprovincial disparities in China since the reforms: Convergence or divergence?," SIRE Discussion Papers 2010-77, Scottish Institute for Research in Economics (SIRE).
    5. Wang, Lili & Szirmai, Adam, 2012. "Capital inputs in the Chinese economy: Estimates for the total economy, industry and manufacturing," China Economic Review, Elsevier, vol. 23(1), pages 81-104.
    6. 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.
    7. 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.
    8. Clarke-Sather, Afton & Qu, Jiansheng & Wang, Qin & Zeng, Jingjing & Li, Yan, 2011. "Carbon inequality at the sub-national scale: A case study of provincial-level inequality in CO2 emissions in China 1997-2007," Energy Policy, Elsevier, vol. 39(9), pages 5420-5428, September.
    9. Jeffrey Zax, 2016. "Provincial valuations of human capital in urban China, inter-regional inequality and the implicit value of a Guangdong hukou," ERSA conference papers ersa16p693, European Regional Science Association.
    10. Cheong, Tsun Se & Wu, Yanrui, 2014. "The impacts of structural transformation and industrial upgrading on regional inequality in China," China Economic Review, Elsevier, vol. 31(C), pages 339-350.
    11. John Knight, 2014. "Inequality in China: An Overview," World Bank Research Observer, World Bank Group, vol. 29(1), pages 1-19.
    12. Greaney, Theresa M. & Li, Yao, 2017. "Multinational enterprises and regional inequality in China," Journal of Asian Economics, Elsevier, vol. 48(C), pages 120-133.
    13. Zhang, Haifeng & Zhang, Hongliang & Zhang, Junsen, 2015. "Demographic age structure and economic development: Evidence from Chinese provinces," Journal of Comparative Economics, Elsevier, vol. 43(1), pages 170-185.
    14. Higashikata, Takayuki, 2013. "Factor decomposition of income inequality change : Japan's regional income disparity from 1955 to 1998," IDE Discussion Papers 400, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    15. Li, Donghui & Liao, Li & Luo, Yuanhang & Zhang, Xueyong, 2014. "Firm headquarters location, ownership structure, and stock return co-movements," Pacific-Basin Finance Journal, Elsevier, vol. 30(C), pages 158-172.
    16. Sung Li & Long Zhao, 2015. "The competitiveness and development strategies of provinces in China: a data envelopment analysis approach," Journal of Productivity Analysis, Springer, vol. 44(3), pages 293-307, December.
    17. Xiao Luo & Chor-Ching Goh & Nong Zhu, 2014. "Income Growth, Inequality and Poverty Reduction: A Case Study of Eight Provinces in China," CIRANO Working Papers 2014s-03, CIRANO.

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