IDEAS home Printed from https://ideas.repec.org/p/cdl/agrebk/qt166747gz.html
   My bibliography  Save this paper

China's Income Distribution over Time: Reasons for Rising Inequality

Author

Listed:
  • Wu, Ximing
  • Perloff, Jeffrey M.

Abstract

We use a new method to estimate China’s income distributions using publicly available interval summary statistics from China’s largest national household survey. We examine rural, urban, and overall income distributions for each year from 1985-2001. By estimating the entire distributions, we can show how the distributions change directly as well as examine trends in traditional welfare indices such as the Gini. We find that inequality has increased substantially in both rural and urban areas. Using an inter-temporal decomposition of aggregate inequality, we determine that increases in inequality within the rural and urban sectors and the growing gap in rural and urban incomes have been equally responsible for the growth in overall inequality over the last two decades. However, the rural-urban income gap has played an increasingly important role in recent years. In contrast, only the growth of inequality within rural and urban areas is responsible for the increase in inequality in the United States, where the overall inequality is close to that of China. We also show that urban consumption inequality (which may be a better indicator of economic well-being than income inequality) rose considerably.

Suggested Citation

  • Wu, Ximing & Perloff, Jeffrey M., 2004. "China's Income Distribution over Time: Reasons for Rising Inequality," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt166747gz, Department of Agricultural & Resource Economics, UC Berkeley.
  • Handle: RePEc:cdl:agrebk:qt166747gz
    as

    Download full text from publisher

    File URL: http://www.escholarship.org/uc/item/166747gz.pdf;origin=repeccitec
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Dennis Tao Yang, 1999. "Urban-Biased Policies and Rising Income Inequality in China," American Economic Review, American Economic Association, vol. 89(2), pages 306-310, May.
    2. D. Ormoneit & H. White, 1999. "An efficient algorithm to compute maximum entropy densities," Econometric Reviews, Taylor & Francis Journals, vol. 18(2), pages 127-140.
    3. Dirk Kreuger & Fabrizio Perri, 2002. "Does Income Inequality Lead to Consumption Inequality? Evidence and Theory," Working Papers 02-15, New York University, Leonard N. Stern School of Business, Department of Economics.
    4. Simon Kuznets & Elizabeth Jenks, 1953. "Shares of Upper Income Groups in Income and Savings," NBER Books, National Bureau of Economic Research, Inc, number kuzn53-1, April.
    5. Ravallion, Martin & Chen, Shaohua, 1999. " When Economic Reform Is Faster Than Statistical Reform: Measuring and Explaining Income Inequality in Rural China," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(1), pages 33-56, February.
    6. T. Paul Schultz, 2004. "Human resources in China: the birth quota, returns to schooling, and migration," Pacific Economic Review, Wiley Blackwell, vol. 9(3), pages 245-267, October.
    7. Burkhauser, Richard V. & Butler, J. S. & Feng, Shuaizhang & Houtenville, Andrew J., 2004. "Long term trends in earnings inequality: what the CPS can tell us," Economics Letters, Elsevier, vol. 82(2), pages 295-299, February.
    8. Wu, Ximing, 2003. "Calculation of maximum entropy densities with application to income distribution," Journal of Econometrics, Elsevier, vol. 115(2), pages 347-354, August.
    9. Golan, Amos & Judge, George G. & Miller, Douglas, 1996. "Maximum Entropy Econometrics," Staff General Research Papers Archive 1488, Iowa State University, Department of Economics.
    10. Milanovic, Branko, 1995. "Poverty, inequality, and social policy in transition economies," Policy Research Working Paper Series 1530, The World Bank.
    11. Mookherjee, Dilip & Shorrocks, Anthony F, 1982. "A Decomposition Analysis of the Trend in UK Income Inequality," Economic Journal, Royal Economic Society, vol. 92(368), pages 886-902, December.
    12. Dale W. Jorgenson, 1998. "Did We Lose the War on Poverty?," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 79-96, Winter.
    13. Keane, Michael & Prasad, Eswar, 2001. "Social Transfers and Inequality During the Polish Transition," MPRA Paper 54326, University Library of Munich, Germany.
    14. Xin Meng, 2004. "Economic Restructuring and Income Inequality in Urban China," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 50(3), pages 357-379, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mitra, Pradeep & Yemtsov, Ruslan, 2006. "Increasing inequality in transition economies : is there more to come?," Policy Research Working Paper Series 4007, The World Bank.
    2. Alberto, Gabriele & Schettino, Francesco, 2006. "Child Mortality In China And Vietnam In A Comparative Perspective," MPRA Paper 3987, University Library of Munich, Germany, revised Dec 2006.
    3. Coes, Donald V., 2008. "Income distribution trends in Brazil and China: Evaluating absolute and relative economic growth," The Quarterly Review of Economics and Finance, Elsevier, vol. 48(2), pages 359-369, May.
    4. James K. Galbraith & Ludmila Krytynskaia & Qifei Wang, 2004. "The Experience of Rising Inequality in Russia and China during the Transition," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 1(1), pages 87-106, June.
    5. Zhongwei Zhao, 2006. "Income Inequality, Unequal Health Care Access, and Mortality in China," Population and Development Review, The Population Council, Inc., vol. 32(3), pages 461-483.
    6. Ling, Davina C., 2009. "Do the Chinese "Keep up with the Jones"?: Implications of peer effects, growing economic disparities and relative deprivation on health outcomes among older adults in China," China Economic Review, Elsevier, vol. 20(1), pages 65-81, March.

    More about this item

    Keywords

    economic development; income distribution;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cdl:agrebk:qt166747gz. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lisa Schiff). General contact details of provider: http://edirc.repec.org/data/dabrkus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.