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When economic reform is faster than statistical reform - measuring and explaining inequality in rural China


  • Ravallion, Martin
  • Shaohua Chen


Official tabulations from household survey data suggest rising income inequality in post-reform rural China, a trend of public concern. But the structural changes in China's rural economy have not been properly reflected in the methods used to process raw survey data. Using micro data from four provinces, the authors find that two-thirds of the conventionally measured increase in inequality in 1985-90 vanishes when market-based valuation methods are used and allowances are made for regional cost-of-living differences. The data revisions also suggest somewhat different explanations for rising inequality. Nonfarm income was secondary to grain production. While access to farm land was relatively equal, higher returns to land over time were inequality-increasing. But holding other factors constant, lower returns to physical capital reduced inequality over time, as did private transfers.

Suggested Citation

  • Ravallion, Martin & Shaohua Chen, 1998. "When economic reform is faster than statistical reform - measuring and explaining inequality in rural China," Policy Research Working Paper Series 1902, The World Bank.
  • Handle: RePEc:wbk:wbrwps:1902

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    References listed on IDEAS

    1. Ravallion, Martin & Chen, Shaohua, 1997. "What Can New Survey Data Tell Us about Recent Changes in Distribution and Poverty?," World Bank Economic Review, World Bank Group, vol. 11(2), pages 357-382, May.
    2. Knight, John & Song, Lina, 1993. "The Spatial Contribution to Income Inequality in Rural China," Cambridge Journal of Economics, Oxford University Press, vol. 17(2), pages 195-213, June.
    3. Cowell, Frank A & Victoria-Feser, Maria-Pia, 1996. "Robustness Properties of Inequality Measures," Econometrica, Econometric Society, vol. 64(1), pages 77-101, January.
    4. Lipton, Michael & Ravallion, Martin, 1995. "Poverty and policy," Handbook of Development Economics,in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 41, pages 2551-2657 Elsevier.
    5. Lanjouw, Peter & Ravallion, Martin, 1995. "Poverty and Household Size," Economic Journal, Royal Economic Society, vol. 105(433), pages 1415-1434, November.
    6. Chen, Shaohua & Ravallion, Martin, 1996. "Data in transition: Assessing rural living standards in Southern China," China Economic Review, Elsevier, vol. 7(1), pages 23-56.
    7. Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, vol. 50(1), pages 193-211, January.
    8. Khan, Azizur Rahman & Griffin, Keith & Riskin, Carl & Renwei, Zhao, 1993. "Sources of income inequality in post-reform China," China Economic Review, Elsevier, vol. 4(1), pages 19-35.
    9. Jalan, Jyotsna & Ravallion, Martin, 1997. "Spatial poverty traps?," Policy Research Working Paper Series 1862, The World Bank.
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    Cited by:

    1. Heshmati, Almas, 2004. "Regional Income Inequality in Selected Large Countries," IZA Discussion Papers 1307, Institute for the Study of Labor (IZA).
    2. Jalan, Jyotsna & Ravallion, Martin, 1999. "Are the poor less well insured? Evidence on vulnerability to income risk in rural China," Journal of Development Economics, Elsevier, vol. 58(1), pages 61-81, February.
    3. Ravallion, Martin & Chen, Shaohua, 2003. "Measuring pro-poor growth," Economics Letters, Elsevier, vol. 78(1), pages 93-99, January.
    4. Zhu, Nong & Luo, Xubei, 2008. "The impact of remittances on rural poverty and inequality in China," Policy Research Working Paper Series 4637, The World Bank.
    5. Chaudhuri, Shubham & Ravallion, Martin, 2006. "Partially awakened giants : uneven growth in China and India," Policy Research Working Paper Series 4069, The World Bank.
    6. Zhu, Nong & Luo, Xubei, 2006. "Nonfarm activity and rural income inequality : a case study of two provinces in China," Policy Research Working Paper Series 3811, The World Bank.
    7. Fan, Shenggen & Chan-Kang, Connie, 2004. "Road development, economic growth, and poverty reduction in China," DSGD discussion papers 12, International Food Policy Research Institute (IFPRI).
    8. Benjamin, Dwayne & Brandt, Loren & Giles, John, 2005. "The Evolution of Income Inequality in Rural China," Economic Development and Cultural Change, University of Chicago Press, vol. 53(4), pages 769-824, July.


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