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Income Disparity and Economic Growth: Evidence from People's Republic of China

Author

Listed:
  • Qin, Duo

    (University of London)

  • Cagas, Marie Anne

    (Asian Development Bank)

  • Ducanes, Geoffrey

    (Asian Development Bank)

  • He, Xinhua

    (Chinese Academy of Social Sciences)

  • Liu, Rui

    (Chinese Academy of Social Sciences)

  • Liu, Shiguo

    (Chinese Academy of Social Sciences)

Abstract

This pilot empirical study seeks to ascertain how income inequality affects growth by incorporating panel data information into a macroeconometric model. People's Republic of China is used as the pilot field. Provincial urban and rural household data are used to construct income inequality measures, which are then used to augment household consumption equations in a quarterly macroeconometric model. Model simulations are performed to study the inequality effect on gross domestic product growth and its sectoral components. Results show that income inequality forms robust explanatory variables of consumption and that the way inequality develops carries certain negative consequences on gross domestic product and sectoral growth.

Suggested Citation

  • Qin, Duo & Cagas, Marie Anne & Ducanes, Geoffrey & He, Xinhua & Liu, Rui & Liu, Shiguo, 2006. "Income Disparity and Economic Growth: Evidence from People's Republic of China," ADB Economics Working Paper Series 84, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0084
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    income inequality; growth; panel data; macroeconometric model; sectoral components;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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