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

Author

Listed:
  • Duo Qin

    (University of London)

  • Marie Anne Cagas

    (Asian Development Bank)

  • Geoffrey Ducanes

    (Asian Development Bank)

  • Xinhua He

    (Chinese Academy of Social Sciences)

  • Rui Liu

    (Chinese Academy of Social Sciences)

  • Shiguo Liu

    (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

  • Duo Qin & Marie Anne Cagas & Geoffrey Ducanes & Xinhua He & Rui Liu & Shiguo Liu, 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
    1. Duo Qin, 2003. "Determinants of household savings in China and their role in quasi‐money supply," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 11(3), pages 513-537, September.
    2. ., 1998. "The concept of sustainable economic development," Chapters, in: The Economics of Environment and Development, chapter 1, pages 1-21, Edward Elgar Publishing.
    3. Zhang, Xiaobo & Kanbur, Ravi, 2005. "Spatial inequality in education and health care in China," China Economic Review, Elsevier, vol. 16(2), pages 189-204.
    4. Perotti, Roberto, 1996. "Growth, Income Distribution, and Democracy: What the Data Say," Journal of Economic Growth, Springer, vol. 1(2), pages 149-187, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

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    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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