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Income Inequality In Urban China And The Role Of State Sector

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  • LEE, JONGCHUL

Abstract

We tried to develop a two sector model to investigate the role of state sector on the urban income inequality in China.We showed that the state sector in the coastal provinces rather than the state sector in the interior provinces plays an important role in the income inequality in urban China.The findings of empirical analysis imply that the income inequality for urban households in China is mainly related to the coastal provinces with relatively higher return to capital, capital intensity, and thus capital income in the state sector.The Chinese government should redirect their policy that emphasizes the role of large enterprises in the state sector and subsidizes the capital in the capital-intensive state sector.The main reason for shifting from emphasizing the capital-intensive state sector to the labor-intensive private sector is to reduce inequality in the urban China.

Suggested Citation

  • Lee, Jongchul, 2013. "Income Inequality In Urban China And The Role Of State Sector," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 54(2), pages 159-176, December.
    • Handle: RePEc:hit:hitjec:v:54:y:2013:i:2:p:159-176
    DOI: 10.15057/26016
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    More about this item

    Keywords

    capital income; capital intensity; return to capital; urban income inequality;
    All these keywords.

    JEL classification:

    • O56 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Oceania
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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