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Intra-Provincial Inequality in China: An Analysis of County-Level Data

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  • Tsun Se Cheong

    (Business School, University of Western Australia)

  • Yanrui Wu

    (Business School, University of Western Australia)

Abstract

This study applies a decomposition technique to analyze China’s regional inequality using county-level data. It is shown that inter-provincial inequality increased significantly during 1997-2007. It is also shown that, although inter-county-level-unit inequality within all the provinces remained more or less the same during the period considered, its contribution to the overall inequality (based on the Theil-T index) amounted to about 60% in 2007. This means that intra-provincial regional inequality is the crux of the problem of regional inequality in China. According to the estimates of the Theil-T index, the increase in intra-provincial regional inequality contributed to 63% of the increase in overall inequality during over the period covered, whereas the provinces of Jiangsu, Hebei and Inner Mongolia together contributed 47%. The county-level data is then divided into city and county subgroups. Further decomposition based on the Theil-T index shows that the inter-county inequality component contributed a much higher proportion than the inter-city inequality component, whereas the component of the inequality between the city and county subgroups contributed the least to the intra-provincial regional inequality. The results from the decomposition also suggest that each province has its own characteristics and evolution pattern of inequality. The decomposition of the intra-provincial regional inequality for each province shows that provinces in the central and western zones should focus on the alleviation of inter-county inequality, while provinces in the north-eastern zone should concentrate on inter-city inequality. The provinces in the eastern zone should focus on both inter-county and inter-city inequalities. The provinces of Fujian, Jiangsu, Henan, Guizhou, and Qinghai should pay attention to the inequality between city and county subgroups.

Suggested Citation

  • Tsun Se Cheong & Yanrui Wu, 2012. "Intra-Provincial Inequality in China: An Analysis of County-Level Data," Economics Discussion / Working Papers 12-17, The University of Western Australia, Department of Economics.
  • Handle: RePEc:uwa:wpaper:12-17
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    File URL: http://www.business.uwa.edu.au/__data/assets/pdf_file/0004/2191684/12-17-Intra-Provincial-Inequality-in-China,-An-Analysis-of-County-Level-Data.pdf
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    References listed on IDEAS

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    1. Shorrocks, A F, 1980. "The Class of Additively Decomposable Inequality Measures," Econometrica, Econometric Society, vol. 48(3), pages 613-625, April.
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