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A Tale of Transition: An Empirical Analysis of Economic Inequality in Urban China, 1986-2009

Author

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  • Haiyan Ding

    (Zhejiang University of Finance and Economics)

  • Hui He

    (International Monetary Fund)

Abstract

This paper is the first comprehensive empirical study of earnings, income, and consumption inequality in urban China from 1986 to 2009, conducted using micro-level data from the Urban Household Survey (UHS). We document a drastic increase in economic inequality for the sample period. We find that consumption inequality closely tracks with income inequality, both over time and over the life cycle. We believe that the main driver of this co-movement could be the dramatic increase in uninsurable permanent income shocks that occurred after the early 1990s, a result of the economic transition in urban China. (Copyright: Elsevier)

Suggested Citation

  • Haiyan Ding & Hui He, 2018. "A Tale of Transition: An Empirical Analysis of Economic Inequality in Urban China, 1986-2009," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 29, pages 106-137, July.
    • Handle: RePEc:red:issued:16-97
    DOI: 10.1016/j.red.2017.12.007
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    2. Hanewald, Katja & Jia, Ruo & Liu, Zining, 2021. "Why is inequality higher among the old? Evidence from China," China Economic Review, Elsevier, vol. 66(C).
    3. Clementi,Fabio & Fabiani,Michele & Molini,Vasco & Schettino,Francesco, 2022. "Is Inequality Systematically Underestimated in Sub-Saharan Africa ? A Proposal toOvercome the Problem," Policy Research Working Paper Series 10058, The World Bank.
    4. Chi‐Yang Chu & Mingming Jiang, 2021. "Financial depth, income inequality, and economic transition," Southern Economic Journal, John Wiley & Sons, vol. 88(1), pages 199-244, July.
    5. Qichun He & Heng-fu Zou, 2018. "The Kuznets Curve on Income Distribution Does Not Hold in China: A Critical Assessment," CEMA Working Papers 607, China Economics and Management Academy, Central University of Finance and Economics.
    6. Westmore, Ben, 2018. "Do government transfers reduce poverty in China? Micro evidence from five regions," China Economic Review, Elsevier, vol. 51(C), pages 59-69.
    7. Gradín, Carlos & Wu, Binbin, 2020. "Income and consumption inequality in China: A comparative approach with India," China Economic Review, Elsevier, vol. 62(C).
    8. Zhou Jiang & Maoxia Zeng & Mingming Shi, 2023. "E‐commerce and Consumption Inequality in China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 31(5), pages 61-86, September.
    9. Weichang Kong & Dorina Pojani & Neil Sipe & Dominic Stead, 2021. "Transport Poverty in Chinese Cities: A Systematic Literature Review," Sustainability, MDPI, vol. 13(9), pages 1-24, April.
    10. Mehmet Nazım Tamkoç & Orhan Torul, 2020. "Cross-Sectional Facts for Macroeconomists: Wage, Income and Consumption Inequality in Turkey," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 18(2), pages 239-259, June.
    11. Shuaizhang Feng & Gaojie Tang, 2019. "Accounting For Urban China'S Rising Income Inequality: The Roles Of Labor Market, Human Capital, And Marriage Market Factors," Economic Inquiry, Western Economic Association International, vol. 57(2), pages 997-1015, April.
    12. Sonali Jain-Chandra & Tidiane Kinda & Kalpana Kochhar & Shi Piao & Johanna Schauer, 2019. "Sharing the Growth Dividend: Analysis of Inequality in Asia," Journal of Banking and Financial Economics, University of Warsaw, Faculty of Management, vol. 2(12), pages 5-28, September.
    13. Li Yang & Filip Novokmet & Branko Milanovic, 2019. "From workers to capitalists in less than two generations: A study of Chinese urban elite transformation between 1988 and 2013," Working Papers hal-02876990, HAL.
    14. Higgins, Patrick & Zha, Tao & Zhong, Wenna, 2016. "Forecasting China's economic growth and inflation," China Economic Review, Elsevier, vol. 41(C), pages 46-61.
    15. Ms. Longmei Zhang, 2016. "Rebalancing in China—Progress and Prospects," IMF Working Papers 2016/183, International Monetary Fund.
    16. Hui He & Lei Ning & Dongming Zhu, 2019. "The Impact of Rapid Aging and Pension Reform on Savings and the Labor Supply," IMF Working Papers 2019/061, International Monetary Fund.
    17. Zhe Fu & Dan Xi & Jia Xu, 2021. "Bank Competition, Financial Development, And Income Inequality," Contemporary Economic Policy, Western Economic Association International, vol. 39(1), pages 42-58, January.
    18. Da Zhao & Jingyuan Guo & Hong Zou & Ze Song, 2022. "From Price to Gain: The Evolution of Household Income Volatility and Consumption Insurance in Urban China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 30(6), pages 113-136, November.

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    More about this item

    Keywords

    Inequality over time and life-cycle; income dynamics; Chinese economy; structural transformation;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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