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The trend of the Gini coefficient of China

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  • Jiandong Chen
  • Dai Dai
  • Ming Pu
  • Wenxuan Hou
  • Qiaobin Feng

Abstract

A literature review indicates that the main problem in calculating the Gini coefficient of Chinese residents’ income is the shortcomings of the data sources. Though many studies have tried to overcome these limitations through decomposing the nationwide Gini ratio by urban and rural areas, the final results have been underestimated, due to the overlap term or residual in the decomposition. This paper analyses the effects of the overlap term on calculating the overall Gini coefficient through a statistical approach, and estimates Chinese Gini ratios since economic reform and open door policies were adopted. Based on decomposing the Chinese Gini coefficient from 1978 to 2006, the authors find that the key factor of income inequality comes from income disparity between rural and urban inhabitants. The authors investigate the features of this income inequality between rural and urban areas. Furthermore, statistical approaches are employed to evaluate the effects of the development of urbanisation and rural-to-urban average income on the income inequality of the whole nation. The results show that accelerating the pace of urbanisation is the key issue to improving Chinese income disparity. On the basis of the above analysis, the paper proposes related policies for policy-makers.

Suggested Citation

  • Jiandong Chen & Dai Dai & Ming Pu & Wenxuan Hou & Qiaobin Feng, 2010. "The trend of the Gini coefficient of China," Global Development Institute Working Paper Series 10910, GDI, The University of Manchester.
  • Handle: RePEc:bwp:bwppap:10910
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    1. repec:taf:ceasxx:v:69:y:2017:i:1:p:1-7 is not listed on IDEAS
    2. repec:bla:revinw:v:63:y:2017:i:2:p:203-218 is not listed on IDEAS
    3. Ying Wu & Hong Yao, 2015. "Income Inequality, State Ownership, and the Pattern of Economic Growth – A Tale of the Kuznets Curve for China since 1978," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 43(2), pages 165-180, June.
    4. Noland, Marcus & Son, Hyun H., 2012. "Editors’ introduction transitional economies: Progress and pitfalls," Journal of Asian Economics, Elsevier, vol. 23(2), pages 107-110.
    5. Parnreiter Christof, 2011. "Akkumulationszyklen und Hegemonie," Zeitschrift für Wirtschaftsgeographie, De Gruyter, vol. 55(1-2), pages 84-102, October.
    6. Zhilin Tang, 2014. "They Are Richer But Are They Happier? Subjective Well-Being of Chinese Citizens Across the Reform Era," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 117(1), pages 145-164, May.
    7. Yi Chen & Frank A. Cowell, 2017. "Mobility in China," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63(2), pages 203-218, June.
    8. Hongliang Wang & Yiwen Yu, 2016. "Increasing health inequality in China: An empirical study with ordinal data," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 14(1), pages 41-61, March.
    9. Gu, Xinhua & Tam, Pui Sun, 2013. "The saving–growth–inequality triangle in China," Economic Modelling, Elsevier, vol. 33(C), pages 850-857.
    10. Xiaobing Wang & Jenifer Piesse & Nick Weaver, 2013. "Mind the gaps: a political economy of the multiple dimensions of China's rural–urban divide," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 27(2), pages 52-67, November.
    11. Xiaobing Wang & Jenifer Piesse & Nick Weaver, 2011. "Mind the gaps: a political economy of the multiple dimensions of China’s rural–urban divide," Global Development Institute Working Paper Series 15211, GDI, The University of Manchester.

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