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Analysis of the Determinants of Income and Income Gap between Urban and Rural China

Author

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  • Su, Biwei

    () (Korea University)

  • Heshmati, Almas

    () (Jönköping University, Sogang University)

Abstract

This paper studies on the determinants of income and urban-rural income gap to shed light on the problem of urban-rural income inequality in China. OLS, conditional quantile regression and Blinder-Oaxaca decomposition methods are used to analyze four waves of the China Health and Nutrition Survey (CHNS) household data. Results show that education and occupation are essential determinants of households' income level. These two factors exert heterogeneous effects at different percentiles of the income distribution. In urban areas, education is more valued for high income earners, while for rural areas, specialized or tertiary education are more beneficial for the poorer households. Among all occupational types, farm activities show much lower returns than other types; and this is more evident for individuals at the left tail of the income distribution. We also find that for the sampled provinces, urban-rural income gap increases from the year of 2000 to 2004 but the gap decreases from 2004 to 2009. The income gap can be largely explained by the individuals' attributes, especially by level of education and type of occupation.

Suggested Citation

  • Su, Biwei & Heshmati, Almas, 2013. "Analysis of the Determinants of Income and Income Gap between Urban and Rural China," IZA Discussion Papers 7162, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp7162
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Lamazi & Syamsurijal A.K & NurlinaTarmizi & Tatang A.M Sariman, 2016. "Analysis Factors That Influence Wage Disparity Between Female Workers In Urban And Rural Areas In South Sumatera," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 4(3), pages 54-63.
    2. Hassine, Nadia Belhaj, 2015. "Economic Inequality in the Arab Region," World Development, Elsevier, vol. 66(C), pages 532-556.
    3. Almas Heshmati & Biwei Su & Seon-Ae Kim, 2015. "Measurement and Analysis of Well-Being in Developed Regions in China," China Economic Policy Review (CEPR), World Scientific Publishing Co. Pte. Ltd., vol. 4(01), pages 1-22, June.
    4. repec:bla:growch:v:48:y:2017:i:3:p:459-486 is not listed on IDEAS
    5. Zelinsky, Tomas, 2014. "Chudoba a deprivácia na Slovensku: Metodologické aspekty a empíria
      [Poverty and Deprivation in Slovakia: Methodological Aspects and Empirics]
      ," MPRA Paper 76868, University Library of Munich, Germany.

    More about this item

    Keywords

    quantile regression; Oaxaca-Blinder decomposition; urban-rural income gap; CHNS household data; China;

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models

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