Reexamining the income inequality in China: Evidence from sequential panel selection method
This study aims to understand whether incomes across different regions in China are converging or diverging. We propose a novel approach to panel unit root testing–sequential panel selection method (SPSM) by using panel Kapetanios et al. (KSS) test with a Fourier function, which is sufficiently efficient to control for structural breaks and nonlinearity as well as cross-sectional dependency. SPSM classifies the whole panel into a group of stationary and nonstationary series. The method also clearly determines how many and which series in the panel are stationary processes. Using the panel data obtained from 31 regions in China, we find out that the real gross domestic product per capita from 1979 to 2010 does not converge in 20 of the 31 regions in China. The evidence of income divergence has important policy implications for China.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jushan Bai & Serena Ng, 2004.
"A PANIC Attack on Unit Roots and Cointegration,"
Econometric Society, vol. 72(4), pages 1127-1177, 07.
- Jushan Bai & Serena Ng, 2001. "A PANIC Attack on Unit Roots and Cointegration," Boston College Working Papers in Economics 519, Boston College Department of Economics.
- Jushan Bai & Serena Ng, 2001. "A Panic Attack on Unit Roots and Cointegration," Economics Working Paper Archive 469, The Johns Hopkins University,Department of Economics.
- Martin Raiser, 1998. "Subsidising inequality: Economic reforms, fiscal transfers and convergence across Chinese provinces," Journal of Development Studies, Taylor & Francis Journals, vol. 34(3), pages 1-26.
- Pesaran, M.H., 2003.
"A Simple Panel Unit Root Test in the Presence of Cross Section Dependence,"
Cambridge Working Papers in Economics
0346, Faculty of Economics, University of Cambridge.
- M. Hashem Pesaran, 2007. "A simple panel unit root test in the presence of cross-section dependence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(2), pages 265-312.
- repec:ebl:ecbull:v:15:y:2007:i:15:p:1-9 is not listed on IDEAS
- Kapetanios, George & Shin, Yongcheol & Snell, Andy, 2003. "Testing for a unit root in the nonlinear STAR framework," Journal of Econometrics, Elsevier, vol. 112(2), pages 359-379, February.
- Peter Pedroni & James Yudong Yao, 2005.
"Regional Income Divergence in China,"
Department of Economics Working Papers
2005-03, Department of Economics, Williams College.
- Jian, Tianlun & Sachs, Jeffrey D. & Warner, Andrew M., 1996.
"Trends in regional inequality in China,"
China Economic Review,
Elsevier, vol. 7(1), pages 1-21.
- Tianlun Jian & Jeffrey D. Sachs & Andrew M. Warner, 1996. "Trends in Regional Inequality in China," NBER Working Papers 5412, National Bureau of Economic Research, Inc.
- Jian, T & Sachs, J-D & Warner, A-M, 1995. "Trends in Regional Inequality in China," Papers 518, Harvard - Institute for International Development.
- Fábio Gomes, 2007. "Convergence in Income Inequality: the Case of Brazilian Municipalities," Economics Bulletin, AccessEcon, vol. 15(15), pages 1-9.
- Campbell, John Y. & Mankiw, N. Gregory, 1989.
"International evidence on the persistence of economic fluctuations,"
Journal of Monetary Economics,
Elsevier, vol. 23(2), pages 319-333, March.
- Mankiw, N. Gregory & Campbell, John, 1989. "International Evidence on the Persistence of Economic Fluctuations," Scholarly Articles 3224417, Harvard University Department of Economics.
- John Y. Campbell & N. Gregory Mankiw, 1988. "International Evidence on the Persistence of Economic Fluctuations," NBER Working Papers 2498, National Bureau of Economic Research, Inc.
- Perron, P, 1988.
"The Great Crash, The Oil Price Shock And The Unit Root Hypothesis,"
338, Princeton, Department of Economics - Econometric Research Program.
- Perron, Pierre, 1989. "The Great Crash, the Oil Price Shock, and the Unit Root Hypothesis," Econometrica, Econometric Society, vol. 57(6), pages 1361-1401, November.
- Kwiatkowski, Denis & Phillips, Peter C. B. & Schmidt, Peter & Shin, Yongcheol, 1992.
"Testing the null hypothesis of stationarity against the alternative of a unit root : How sure are we that economic time series have a unit root?,"
Journal of Econometrics,
Elsevier, vol. 54(1-3), pages 159-178.
- Kwiatkowski, D. & Phillips, P.C.B. & Schmidt, P., 1990. "Testing the Null Hypothesis of Stationarity Against the Alternative of Unit Root : How Sure are we that Economic Time Series have a Unit Root?," Papers 8905, Michigan State - Econometrics and Economic Theory.
- Denis Kwiatkowski & Peter C.B. Phillips & Peter Schmidt, 1991. "Testing the Null Hypothesis of Stationarity Against the Alternative of a Unit Root: How Sure Are We That Economic Time Series Have a Unit Root?," Cowles Foundation Discussion Papers 979, Cowles Foundation for Research in Economics, Yale University.
- Georgios Chortareas & George Kapetanios, 2004.
"Getting PPP Right: Identifying Mean-Reverting Real Exchange Rates in Panels,"
517, Queen Mary University of London, School of Economics and Finance.
- Chortareas, Georgios & Kapetanios, George, 2009. "Getting PPP right: Identifying mean-reverting real exchange rates in panels," Journal of Banking & Finance, Elsevier, vol. 33(2), pages 390-404, February.
- Georgios Chortareas & George Kapetanios, 2004. "Getting PPP Right: Identifying Mean Reverting Real Exchange Rates in Panels," Money Macro and Finance (MMF) Research Group Conference 2004 32, Money Macro and Finance Research Group.
- Georgios Chortareas & George Kapetanios, 2008. "Getting PPP Right: Identifying Mean-Reverting Real Exchange Rates in Panels," Working Papers 629, Queen Mary University of London, School of Economics and Finance.
- Gundlach, Erich, 1997. "Regional convergence of output per worker in China: A neoclassical interpretation," Open Access Publications from Kiel Institute for the World Economy 1765, Kiel Institute for the World Economy (IfW).
- repec:ebl:ecbull:v:4:y:2003:i:22:p:1-10 is not listed on IDEAS
- Ravallion, Martin, 2003.
Elsevier, vol. 80(3), pages 351-356, September.
- Bernard, A.B. & Durlauf, S.N., 1993.
"Convergence in International Output,"
93-7, Massachusetts Institute of Technology (MIT), Department of Economics.
- Pascalau, Razvan, 2008.
"Unit Roots Tests with Smooth Breaks: An Application to the Nelson-Plosser Data Set,"
7220, University Library of Munich, Germany.
- Razvan Pascalau, 2010. "Unit root tests with smooth breaks: an application to the Nelson-Plosser data set," Applied Economics Letters, Taylor & Francis Journals, vol. 17(6), pages 565-570.
- Choi, In, 2001. "Unit root tests for panel data," Journal of International Money and Finance, Elsevier, vol. 20(2), pages 249-272, April.
- Walter Enders & Junsoo Lee, 2012. "A Unit Root Test Using a Fourier Series to Approximate Smooth Breaks," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 74(4), pages 574-599, 08.
- 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.
- Whitney K. Newey & Kenneth D. West, 1994.
"Automatic Lag Selection in Covariance Matrix Estimation,"
Review of Economic Studies,
Oxford University Press, vol. 61(4), pages 631-653.
- Kenneth D. West & Whitney K. Newey, 1995. "Automatic Lag Selection in Covariance Matrix Estimation," NBER Technical Working Papers 0144, National Bureau of Economic Research, Inc.
- Newey, W.K. & West, K.D., 1992. "Automatic Lag Selection in Covariance Matrix Estimation," Working papers 9220, Wisconsin Madison - Social Systems.
- Yuen Tsui, Kai, 1991. "China's regional inequality, 1952-1985," Journal of Comparative Economics, Elsevier, vol. 15(1), pages 1-21, March.
- Ralf Becker & Walter Enders & Junsoo Lee, 2006. "A Stationarity Test in the Presence of an Unknown Number of Smooth Breaks," Journal of Time Series Analysis, Wiley Blackwell, vol. 27(3), pages 381-409, 05.
- Michael Bleaney & Akira Nishiyama, 2003. "Convergence in income inequality: differences between advanced and developing countries," Economics Bulletin, AccessEcon, vol. 4(22), pages 1-10.
- 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.
- Roberto Ezcurra & Pedro Pascual, 2005. "Is there convergence in income inequality levels among the European regions?," Applied Economics Letters, Taylor & Francis Journals, vol. 12(12), pages 763-767.
- Pei-Chien Lin & Ho-Chuan Huang, 2012. "Convergence in income inequality? evidence from panel unit root tests with structural breaks," Empirical Economics, Springer, vol. 43(1), pages 153-174, August.
- Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002.
"Unit root tests in panel data: asymptotic and finite-sample properties,"
Journal of Econometrics,
Elsevier, vol. 108(1), pages 1-24, May.
- Tom Doan, . "LEVINLIN: RATS procedure to perform Levin-Lin-Chu test for unit roots in panel data," Statistical Software Components RTS00242, Boston College Department of Economics.
- Pasaran, M.H. & Im, K.S. & Shin, Y., 1995.
"Testing for Unit Roots in Heterogeneous Panels,"
Cambridge Working Papers in Economics
9526, Faculty of Economics, University of Cambridge.
- Evans, P, 1996.
"Using Panel Data to Evaluate Growth Theories,"
ISER Discussion Paper
0397, Institute of Social and Economic Research, Osaka University.
- Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-72, June.
- Maddala, G S & Wu, Shaowen, 1999. " A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 631-52, Special I.
- Ucar, Nuri & Omay, Tolga, 2009. "Testing for unit root in nonlinear heterogeneous panels," Economics Letters, Elsevier, vol. 104(1), pages 5-8, July.
When requesting a correction, please mention this item's handle: RePEc:eee:ecmode:v:31:y:2013:i:c:p:37-42. 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: (Shamier, Wendy)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 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.