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The unreported income and its impact on Gini coefficient in China

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  • Juwei Zhang
  • Wen Zhao

Abstract

Unreported income is an important factor that distorts China’s household income accounting and Gini coefficient calculation. On the basis of comparing NBS household survey data and data from China’s Cash Flow Statement, this paper estimates the size and structure of unreported income in China over recent years. Our study found that about 20% of household disposable income has not been covered by existing household surveys in recent years. In 2015, the omission rate was 19.5%. Operating income and property income have the highest omission rates. Considering that unreported income is primarily owned by high-income people, China’s falling Gini coefficient since 2009 may have resulted from the statistical omission of partial incomes of high-income group. If unreported income is re-included, China’s Gini coefficient would increase by 10 percentage points rather than decrease.

Suggested Citation

  • Juwei Zhang & Wen Zhao, 2019. "The unreported income and its impact on Gini coefficient in China," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 17(3), pages 245-259, July.
    • Handle: RePEc:taf:jocebs:v:17:y:2019:i:3:p:245-259
    DOI: 10.1080/14765284.2019.1668656
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    Cited by:

    1. Li, Feng & Wang, Xintao, 2024. "Misreporting in household income and expenditure: Evidence from the Chinese Household Income Project," Economics Letters, Elsevier, vol. 237(C).
    2. Gu, Xiang & Hua, Sheng & McKenzie, Tom & Zheng, Yanqiao, 2022. "Like father, like son? Parental input, access to higher education, and social mobility in China," China Economic Review, Elsevier, vol. 72(C).
    3. Yanqiao Zheng & Xiaoqi Zhang & Qiwen Dai & Xing Zhang, 2020. "To Float or Not to Float? Internal Migration of Skilled Laborers in China," IJERPH, MDPI, vol. 17(23), pages 1-15, December.
    4. Zheng, Yanqiao & Zhang, Xiaoqi & Zhu, Yu, 2021. "Overeducation, major mismatch, and return to higher education tiers: Evidence from novel data source of a major online recruitment platform in China," China Economic Review, Elsevier, vol. 66(C).
    5. Sarah Hudson & Helena V. González-Gómez & Cyrlene Claasen, 2022. "Societal Inequality, Corruption and Relation-Based Inequality in Organizations," Journal of Business Ethics, Springer, vol. 181(3), pages 789-809, December.

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