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Why Are Household Incomes More Unequally Distributed in China than in Russia?

  • Gustafsson, Björn Anders


    (University of Gothenburg)

  • Li, Shi


    (Beijing Normal University)

  • Nivorozhkina, Ludmila


    (Rostov State Economic University)

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Harmonised microdata show a Gini coefficient for per capita total income of 45.3 percent in China 2002 and 33.6 percent in Russia 2003. A much larger urban to rural income gap in combination with a much smaller proportion of people living in urban areas in China are important reasons for this cross-country difference in inequality. Wage is a more non-equalising income source in China than in Russia. While Russian public transfers reduce income inequality, Chinese public transfers increase income inequality. Cross-country differences in the process of transition are also found to be significant. A relatively large non-agriculture self-employment sector is non-equalising in rural China, but is also narrowing the urban to rural income gap. In contrast to the many cross-country differences revealed, we report income inequality among urban residents in China and in urban Russia to be very similar.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5383.

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Length: 39 pages
Date of creation: Dec 2010
Date of revision:
Publication status: published in: Cambridge Journal of Economics, 2011, 35 (5), 897 - 920
Handle: RePEc:iza:izadps:dp5383
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