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Globalization and Regional Income Inequality--Evidence from within China

  • Guanghua Wan

    (UNU-WIDER, Helsinki, Finland)

  • Ming Lu

    (Employment & Social Security Research Center, & China Center for Economic Studies, Fudan University)

  • Zhao Chen

    (China Center for Economic Studies, Fudan University)

China¡¯s recent accession to the WTO is expected to accelerate its integration into the world economy, which aggravates concerns over the impact of globalization on the already rising inter-region income inequality in China. This paper discusses China¡¯s globalization process and estimates an income generating function, incorporating trade and FDI variables. It then applies the newly developed Shapley value decomposition technique to quantify the contributions of globalization, along with other variables, to regional inequality. It is found that (a) globalization constitutes a positive and substantial share to regional inequality and the share rises over time; (b) capital is one of the largest and increasingly important contributor to regional inequality; (c) economic reform characterized by privatization exerts a significant impact on regional inequality; and (d) the relative contributions of education, location, urbanization and dependency ratio to regional inequality have been declining.

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File URL: http://econwpa.repec.org/eps/em/papers/0511/0511014.pdf
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Paper provided by EconWPA in its series Econometrics with number 0511014.

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Length: 28 pages
Date of creation: 16 Nov 2005
Date of revision:
Handle: RePEc:wpa:wuwpem:0511014
Note: Type of Document - pdf; pages: 28
Contact details of provider: Web page: http://econwpa.repec.org

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  1. Xavier Sala-i-Martin, 2002. "The world distribution of income (estimated from individual country distributions)," Economics Working Papers 615, Department of Economics and Business, Universitat Pompeu Fabra, revised May 2002.
  2. Xavier Sala-i-Martin, 2001. "The disturbing 'rise' of global income inequality," Economics Working Papers 616, Department of Economics and Business, Universitat Pompeu Fabra, revised Apr 2002.
  3. Ben-David, Dan, 1993. "Equalizing Exchange: Trade Liberalization and Income Convergence," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 653-79, August.
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