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Income inequality in China: Testing the Kuznets Hypothesis with National Time Series and Provincial Panel Data 1978-2011


  • Wenli Cheng
  • Yongzheng Wu


This paper investigates income inequality in the post-reform Chinese economy using both national time series and provincial panel data 1978 to 2011. We identify a Kuznets inverted-U relationship between economic development and income inequality and show that this relationship was driven by the process of urbanization. We find that, after controlling for urbanization, low productivity in agriculture relative to that of the economy as a whole (i.e., dualism) and inflation appear to have been significant contributing factors to income inequality. There is also some evidence to suggest that, the expansion of higher education may have widened income inequality, but the expansion of secondary education may have narrowed it.

Suggested Citation

  • Wenli Cheng & Yongzheng Wu, 2015. "Income inequality in China: Testing the Kuznets Hypothesis with National Time Series and Provincial Panel Data 1978-2011," Monash Economics Working Papers 32-15, Monash University, Department of Economics.
  • Handle: RePEc:mos:moswps:2015-32

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    References listed on IDEAS

    1. Pedro Conceicao & James K. Galbraith, 2000. "Constructing Long and Dense Time-Series of Inequality Using the Theil Index," Eastern Economic Journal, Eastern Economic Association, vol. 26(1), pages 61-74, Winter.
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    More about this item


    Kuznets curve; income inequality in China; Theil index; urbanisation; dualism;

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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