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Mind the gaps: a political economy of the multiple dimensions of China’s rural–urban divide

  • Xiaobing Wang
  • Jenifer Piesse
  • Nick Weaver
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    China’s impressive growth has been accompanied by increasing inequality and a widening rural– urban divide. This paper identifies and examines nine major dimensions of this divide: income, consumption, education, healthcare, employment, child care, pensions, access to public services and environment. The paper attributes the main causes of the rural–urban divide to China’s development strategy and the associated regressive tax and subsidies policies. This paper is among the first to evaluate and decompose the rural–urban divide into multiple dimensions or gaps, and highlights the severe constraints on the Chinese peasantry. It discuses the policy and welfare implications of the rural–urban divide. It argues that the large size of the rural–urban divide was mainly due to inequality in opportunities and the lack of social provision of public goods in rural areas. The removal of discriminatory policies, including the provision of such public goods, will lead to greater equality of opportunity and a reduced gap. Increased equality and efficiency can be achieved simultaneously.

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    Paper provided by BWPI, The University of Manchester in its series Brooks World Poverty Institute Working Paper Series with number 15211.

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    Date of creation: 2011
    Date of revision:
    Handle: RePEc:bwp:bwppap:15211
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    1. Gustafsson, Bjorn & Shi, Li, 1997. "Types of Income and Inequality in China at the End of the 1980s," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 43(2), pages 211-26, June.
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    3. Fung Kwan, 2009. "Agricultural labour and the incidence of surplus labour: experience from China during reform," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 7(3), pages 341-361.
    4. Xiaobing Wang & Jenifer Piesse, 2010. "Inequality and the Urban-rural Divide in China: Effects of Regressive Taxation," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 18(6), pages 36-55.
    5. Terry Sicular & Yue Ximing & Björn Gustafsson & Li Shi, 2007. "The Urban-Rural Income Gap And Inequality In China," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 53(1), pages 93-126, 03.
    6. Bernard Salanié, 2003. "The Economics of Taxation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262194864, June.
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    11. Lin, Justin Yifu, 1990. "Collectivization and China's Agricultural Crisis in 1959-1961," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1228-52, December.
    12. Dong, Keyong, 2009. "Medical insurance system evolution in China," China Economic Review, Elsevier, vol. 20(4), pages 591-597, December.
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    14. Jiandong Chen & Dai Dai & Ming Pu & Wenxuan Hou & Qiaobin Feng, 2010. "The trend of the Gini coefficient of China," Brooks World Poverty Institute Working Paper Series 10910, BWPI, The University of Manchester.
    15. Knight, John & Song, Lina, 1999. "The Rural-Urban Divide: Economic Disparities and Interactions in China," OUP Catalogue, Oxford University Press, number 9780198293309.
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