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Top-income data and income inequality correction in China

Author

Listed:
  • Li, Chengyou
  • Yu, Yangcheng
  • Li, Qinghai

Abstract

This paper estimates the level of income inequality of Chinese residents by combining data from the 2013 Chinese Household Income Project (CHIP 2013) and the Top Incomes in China in 2013 (TIC 2013). Specifically, we apply a Pareto model and a parametric bootstrap method to correct for missing top incomes in the CHIP 2013. After connecting the two datasets, we find that the level of income inequality measured by the Gini coefficient and top income share increases significantly compared with the CHIP2013 data. These conclusions are supported by robustness checks based on other household survey (HS) data and techniques (the expansion method and the direct splicing method). Our results not only facilitate understanding of China’s true level of income inequality, but also provide evidence for income-related policies. It is essential, therefore, that we collect top-income data in China and connect it with the HS data.

Suggested Citation

  • Li, Chengyou & Yu, Yangcheng & Li, Qinghai, 2021. "Top-income data and income inequality correction in China," Economic Modelling, Elsevier, vol. 97(C), pages 210-219.
  • Handle: RePEc:eee:ecmode:v:97:y:2021:i:c:p:210-219
    DOI: 10.1016/j.econmod.2021.01.018
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    References listed on IDEAS

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    More about this item

    Keywords

    Top incomes; Pareto model; Parametric bootstrap; Income inequality;
    All these keywords.

    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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