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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.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1902.

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Date of creation: 31 Mar 1998
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Handle: RePEc:wbk:wbrwps:1902
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  1. Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, vol. 50(1), pages 193-211, January.
  2. 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 357-82, May.
  3. Lipton, Michael & Ravallion, Martin, 1993. "Poverty and policy," Policy Research Working Paper Series 1130, The World Bank.
  4. 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.
  5. Cowell, Frank A & Victoria-Feser, Maria-Pia, 1996. "Robustness Properties of Inequality Measures," Econometrica, Econometric Society, vol. 64(1), pages 77-101, January.
  6. 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.
  7. Knight, J. & Song, L., 1990. "The Spatial Contribution To Income Inequality In Rural China," Economics Series Working Papers 99106, University of Oxford, Department of Economics.
  8. Jalan, Jyotsna & Ravallion, Martin, 1997. "Spatial poverty traps?," Policy Research Working Paper Series 1862, The World Bank.
  9. Lanjouw, Peter & Ravallion, Martin & DEC, 1994. "Poverty and household size," Policy Research Working Paper Series 1332, The World Bank.
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