IDEAS home Printed from https://ideas.repec.org/a/bla/revinw/v53y2007i1p93-126.html
   My bibliography  Save this article

The Urban–Rural Income Gap And Inequality In China

Author

Listed:
  • Terry Sicular
  • Yue Ximing
  • Björn Gustafsson
  • Li Shi

Abstract

Using new household survey data for 1995 and 2002, we investigate the size of China's urban–rural income gap, the gap's contribution to overall inequality in China, and the factors underlying the gap. Our analysis improves on past estimates by using a fuller measure of income, adjusting for spatial price differences and including migrants. Our methods include inequality decomposition by population subgroup and the Oaxaca–Blinder decomposition. Several key findings emerge. First, the adjustments substantially reduce China's urban–rural income gap and its contribution to inequality. Nevertheless, the gap remains large and has increased somewhat over time. Second, after controlling for household characteristics, location of residence remains the most important factor underlying the urban–rural income gap. The only household characteristic that contributes substantially to the gap is education. Differences in the endowments of, and returns to, other household characteristics such as family size and composition, landholdings, and Communist Party membership are relatively unimportant.

Suggested Citation

  • 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.
  • Handle: RePEc:bla:revinw:v:53:y:2007:i:1:p:93-126
    DOI: 10.1111/j.1475-4991.2007.00219.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1475-4991.2007.00219.x
    Download Restriction: no

    File URL: https://libkey.io/10.1111/j.1475-4991.2007.00219.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Morduch, Jonathan & Sicular, Terry, 2000. "Politics, growth, and inequality in rural China: does it pay to join the Party?," Journal of Public Economics, Elsevier, vol. 77(3), pages 331-356, September.
    2. Zhang, Xiaobo & Kanbur, Ravi, 2005. "Spatial inequality in education and health care in China," China Economic Review, Elsevier, vol. 16(2), pages 189-204.
    3. Knight, John & Song, Lina, 1999. "The Rural-Urban Divide: Economic Disparities and Interactions in China," OUP Catalogue, Oxford University Press, number 9780198293309, November.
    4. David E. Sahn & David C. Stifel, 2003. "Urban--Rural Inequality in Living Standards in Africa," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 12(4), pages 564-597, December.
    5. Fan, Shenggen & Zhang, Linxiu & Zhang, Xiaobo, 2004. "Reforms, Investment, and Poverty in Rural China," Economic Development and Cultural Change, University of Chicago Press, vol. 52(2), pages 395-421, January.
    6. 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.
    7. A.B. Atkinson & F. Bourguignon (ed.), 2000. "Handbook of Income Distribution," Handbook of Income Distribution, Elsevier, edition 1, volume 1, number 1, December.
    8. Azizur Rahman Khan & Keith Griffin & Carl Riskin & Zhao Renwei, 1993. "Household Income and its Distribution in China," Palgrave Macmillan Books, in: Keith Griffin & Zhao Renwei (ed.), The Distribution of Income in China, chapter 1, pages 25-73, Palgrave Macmillan.
    9. Carlos Gradín & Olga Cantó & Coral del Río, 2008. "Inequality, poverty and mobility: Choosing income or consumption as welfare indicators," Investigaciones Economicas, Fundación SEPI, vol. 32(2), pages 169-200, May.
    10. Miles, David, 1997. "A Household Level Study of the Determinants of Incomes and Consumption," Economic Journal, Royal Economic Society, vol. 107(440), pages 1-25, January.
    11. Zai Liang & Zhongdong Ma, 2004. "China's Floating Population: New Evidence from the 2000 Census," Population and Development Review, The Population Council, Inc., vol. 30(3), pages 467-488, September.
    12. Ping Zhang, 1997. "Income Distribution during the Transition in China," WIDER Working Paper Series wp-1997-138, World Institute for Development Economic Research (UNU-WIDER).
    13. Brandt, Loren & Holz, Carsten A, 2006. "Spatial Price Differences in China: Estimates and Implications," Economic Development and Cultural Change, University of Chicago Press, vol. 55(1), pages 43-86, October.
    14. Anthony Shorrocks & Guanghua Wan, 2005. "Spatial decomposition of inequality," Journal of Economic Geography, Oxford University Press, vol. 5(1), pages 59-81, January.
    15. X. B. Zhao & S. P. Tong, 2000. "Unequal Economic Development in China: Spatial Disparities and Regional Policy Reconsideration, 1985-1995," Regional Studies, Taylor & Francis Journals, vol. 34(6), pages 549-561.
    16. Robert Eastwood & Michael Lipton, 2000. "Rural-Urban Dimensions of Inequality Change," WIDER Working Paper Series wp-2000-200, World Institute for Development Economic Research (UNU-WIDER).
    17. 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.
    18. Shorrocks, Anthony F, 1984. "Inequality Decomposition by Population Subgroups," Econometrica, Econometric Society, vol. 52(6), pages 1369-1385, November.
    19. Ronald L. Oaxaca & Michael R. Ransom, 1999. "Identification in Detailed Wage Decompositions," The Review of Economics and Statistics, MIT Press, vol. 81(1), pages 154-157, February.
    20. World Bank, 2003. "China - Promoting Growth with Equity : Country Economic Memorandum," World Bank Publications - Reports 14643, The World Bank Group.
    21. Zhang, Xiaobo & Fan, Shenggen, 2004. "Public investment and regional inequality in rural China," Agricultural Economics, Blackwell, vol. 30(2), pages 89-100, March.
    22. Jalan, Jyotsna & Ravallion, Martin, 1998. "Transient Poverty in Postreform Rural China," Journal of Comparative Economics, Elsevier, vol. 26(2), pages 338-357, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Leonardo Bonilla Mejía, 2011. "Diferencias regionales en la distribución del ingreso en Colombia," Revista Sociedad y Economía - CIDSE, Universidad del Valle - CIDSE, December.
    2. Qu, Zhaopeng (Frank) & Zhao, Zhong, 2008. "Urban-Rural Consumption Inequality in China from 1988 to 2002: Evidence from Quantile Regression Decomposition," IZA Discussion Papers 3659, Institute of Labor Economics (IZA).
    3. Xiaobing Wang & Jenifer Piesse, 2009. "Welfare Effects of Regressive Taxation and Subsidies in China," Global Development Institute Working Paper Series 10809, GDI, The University of Manchester.
    4. Xing, Li & Fan, Shenggen & Luo, Xiaopeng & Zhang, Xiaobo, 2006. "Village Inequality in Western China," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25390, International Association of Agricultural Economists.
    5. Yu Chen, 2011. "Occupational Attainment of Migrants and Local Workers: Findings from a Survey in Shanghai’s Manufacturing Sector," Urban Studies, Urban Studies Journal Limited, vol. 48(1), pages 3-21, January.
    6. 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.
    7. Xin Meng, 2004. "Economic Restructuring and Income Inequality in Urban China," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 50(3), pages 357-379, September.
    8. 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.
    9. Chaudhuri, Shubham & Ravallion, Martin, 2006. "Partially awakened giants : uneven growth in China and India," Policy Research Working Paper Series 4069, The World Bank.
    10. Appleton, Simon & Song, Lina & Xia, Qingjie, 2010. "Growing out of Poverty: Trends and Patterns of Urban Poverty in China 1988-2002," World Development, Elsevier, vol. 38(5), pages 665-678, May.
    11. Lida Fan, 2009. "Measuring Interprovincial Flows of Human Capital in China: 1995–2000," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 28(3), pages 367-387, June.
    12. Yao, Shujie & Zhang, Zongyi & Hanmer, Lucia, 2004. "Growing inequality and poverty in China," China Economic Review, Elsevier, vol. 15(2), pages 145-163.
    13. 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.
    14. Wasim, Summerina & Munir, Kashif, 2017. "Regional Disparity and Decentralization in Pakistan: A Decomposition Analysis," MPRA Paper 83444, University Library of Munich, Germany.
    15. Azam, Mehtabul, 2019. "Accounting for growing urban-rural welfare gaps in India," World Development, Elsevier, vol. 122(C), pages 410-432.
    16. Jiandong Chen & Dai Dai & Ming Pu & Wenxuan Hou & Qiaobin Feng, 2010. "The trend of the Gini coefficient of China," Global Development Institute Working Paper Series 10910, GDI, The University of Manchester.
    17. Raya Das & Ravi Srivastava, 2021. "Income inequality among agricultural households in India: A regression‐based decomposition analysis," Review of Development Economics, Wiley Blackwell, vol. 25(3), pages 1128-1149, August.
    18. Rui Hao & Zheng Wei, 2009. "Measuring inter-provincial income inequality in China: a sensitivity analysis," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 7(1), pages 55-76.
    19. Renkow, Mitch, 2010. "Impacts of IFPRI's "priorities for pro-poor public investment" global research program:," Impact assessments 31, International Food Policy Research Institute (IFPRI).
    20. 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.

    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:revinw:v:53:y:2007:i:1:p:93-126. 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: . General contact details of provider: https://edirc.repec.org/data/iariwea.html .

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/iariwea.html .

    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.