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A Pause in the Growth of Inequality in China?

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  • Richard Herd

    (OECD)

Abstract

In recent years, policymaking in China has put increasing emphasis on stemming the growth in inequality, which had been fairly steep since the 1980s. Policy action has taken the form of regional development measures and of reforms of various aspects of the social safety net broadly defined. The Western Development Plan has aimed at narrowing the income gap between the sparsely populated and under-developed West and the more prosperous and faster-growing East. The bulk of the expenditure, however, has been on large capital-intensive projects rather than on education and other social spending. More emphasis on education would help reduce the income gap, since human capital is a key determinant of income. Government policies to improve conditions in rural areas nationwide have involved a substantial reduction in the burden of regressive taxes and fees. Welfare assistance has also evolved: a minimum living allowance has been introduced in urban and more recently in rural areas, but it has not reduced poverty that much, not least because of how it is administered. Moreover, the financing of this allowance ought to rely more on national solidarity and its delivery needs to be better co-ordinated with that of other social benefits. A set of new indicators of nationwide inequality, based on household survey data, suggests that overall inequality has ceased to increase in recent years, and may even have inched down. Alternative measures of income inequality across provinces show that, if migration is taken into account, disparities are markedly less, and have tended to decline somewhat in recent years. Even so, geographical inequality remains very high by international standards. It reflects intra- more than inter-provincial differences, pointing to persistent, if diminishing, labour market segmentation. Une pause dans le creusement des inégalités en Chine ? Ces dernières années, la volonté d’endiguer l’accentuation des inégalités, qui tendaient à se creuser depuis les années 1980, a pris une place grandissante dans les grandes orientations chinoises. L’action publique s’est traduite par des mesures de développement régional et des réformes de divers aspects du filet de sécurité sociale au sens large. La stratégie de mise en valeur de l’Ouest a visé à réduire l’écart de revenu entre cette partie du pays peu peuplée et insuffisamment développée et l’Est plus prospère où la croissance est plus rapide. Toutefois, les dépenses ont, pour l’essentiel, privilégié les grands projets à forte intensité de capital par rapport à l’éducation et à d’autres préoccupations sociales. Un recentrage sur l’éducation contribuerait à réduire les disparités en termes de revenu, celui-ci étant largement déterminé par le capital humain. Les politiques menées par le gouvernement pour améliorer la situation des campagnes dans tout le pays ont veillé à alléger sensiblement le poids des impôts et prélèvements régressifs. L’aide sociale a également évolué : une garantie de minimum vital a été instaurée dans les zones urbaines puis, il y a peu, dans les zones rurales, sans pour autant faire véritablement reculer la pauvreté, ne serait-ce qu’en raison de ses modalités administratives. Par ailleurs, le financement de cette garantie de minimum vital devrait reposer davantage sur la solidarité nationale, et une coordination plus étroite s’impose avec l’attribution d’autres prestations sociales. D’après un ensemble de nouveaux indicateurs nationaux, conçus à partir de données d’enquêtes sur les ménages, les inégalités globales n’augmentent plus depuis quelques années ; peut être même ont-elles diminué. Il ressort d’autres mesures des inégalités de revenu entre provinces que si les migrations entrent en ligne de compte, le fossé est nettement moins grand, et tend à se combler quelque peu. Les inégalités géographiques n’en restent pas moins très fortes par rapport aux normes internationales. Le phénomène s’explique par des différences plus intra qu’interprovinciales, et renvoie à une segmentation du marché du travail persistante, bien qu’elle aille en s’estompant.

Suggested Citation

  • Richard Herd, 2010. "A Pause in the Growth of Inequality in China?," OECD Economics Department Working Papers 748, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:748-en
    DOI: 10.1787/5kmlh52r90zs-en
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    Citations

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    Cited by:

    1. Richard Herd, 2013. "The evolution of China’s social policies," Economic Change and Restructuring, Springer, vol. 46(1), pages 109-141, March.
    2. Peter Hoeller & Isabelle Joumard & Mauro Pisu & Debra Bloch, 2012. "Less Income Inequality and More Growth – Are They Compatible? Part 1. Mapping Income Inequality Across the OECD," OECD Economics Department Working Papers 924, OECD Publishing.
    3. Lee, Jongchul, 2013. "A provincial perspective on income inequality in urban China and the role of property and business income," China Economic Review, Elsevier, vol. 26(C), pages 140-150.
    4. Molero-Simarro, Ricardo, 2017. "Inequality in China revisited. The effect of functional distribution of income on urban top incomes, the urban-rural gap and the Gini index, 1978–2015," China Economic Review, Elsevier, vol. 42(C), pages 101-117.
    5. Kanbur, Ravi, 2013. "Economic Inequality and Economic Development: Lessons and Implications of Global Experiences for the Arab World," Working Papers 180077, Cornell University, Department of Applied Economics and Management.

    More about this item

    Keywords

    assistance sociale; capital humain; China; Chine; education; hukou; hukou; human capital; income inequality; inégalité des revenus; labour market segmentation; migration; migration; pauvreté; poverty; segmentation du marché du travail; social assistance; éducation;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E64 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Incomes Policy; Price Policy
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • 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
    • P25 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Urban, Rural, and Regional Economics
    • P36 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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