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Understanding the Kuznets Process: An Empirical Investigation of Income Inequality in China 1978-2011

  • Wenli Cheng
  • Yongzheng Wu
  • CEMA
  • College of Mathematics and Computer Science, Hunan Normal University

This paper investigates income inequality in the post-reform Chinese economy of 1978 to 2011. We identify a Kuznets inverted-U relationship between economic development and overall income inequality and provide evidence to suggest that this relationship was driven by the process of urbanization. We demonstrate that, after controlling for urbanization, low productivity in agriculture relative to that of the economy as a whole (dualism) was a significant contributing factor to income inequality. Inflation and the expansion of higher education are also found to have had an effect of widening inequality, but the effect of education does not appear to be robust.

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File URL: http://www.buseco.monash.edu.au/eco/research/papers/2014/1214kuznetschengwucema.pdf
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Paper provided by Monash University, Department of Economics in its series Monash Economics Working Papers with number 12-14.

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Length: 25 pages
Date of creation: Apr 2014
Date of revision:
Handle: RePEc:mos:moswps:2014-12
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