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A Review of the Chinese Gini Coefficient from 1978 to 2008

22 Pages Posted: 19 Jan 2009 Last revised: 14 Mar 2014

Jiandong Chen

Southwestern University of Finance and Economics

Wenxuan Hou

University of Edinburgh - Business School

Shenwu Jin

affiliation not provided to SSRN

Date Written: June 1, 2009

Abstract

Based on Lewis’ dual-sector model, this paper explores a new mathematical model to evaluate income inequality between urban and rural residents quantitatively. Using the model, this thesis indicates that as the urban population increases, the income inequality between rural and urban residents will first rise and then fall. Further, this paper also provides a parameter to estimate current situation and forecast the future changing tendency. These findings are applied to examine Chinese rural-urban income disparity from 1978 to 2008 and the results show that the rise of the urban population, rather than the enlargement of the income gap between urban and rural residents, plays the major role in the increase of the Gini ratio between rural and urban inhabitants from 1978 to 2001, whereas after 2001 the further increases in the urban population tended to narrow the urban-rural income disparity. Using the econometrics model, this paper also investigates the situation in each province from 2005 to 2007, to present a comprehensive picture of the divided Chinese urban-rural income. The results indicate that the key factor determining urban-rural disparity is the process of urbanization.

Keywords: Gini Coefficient, China, Income Disparity, Inequality, Migration

JEL Classification: D63, I32

Suggested Citation

Chen, Jiandong and Hou, Wenxuan and Jin, Shenwu, A Review of the Chinese Gini Coefficient from 1978 to 2008 (June 1, 2009). Available at SSRN: https://ssrn.com/abstract=1328998 or http://dx.doi.org/10.2139/ssrn.1328998

Jiandong Chen

Southwestern University of Finance and Economics ( email )

55 Guanghuacun St,
Chengdu, Sichuan 610074
China

HOME PAGE: http://cjd.weebly.com

Wenxuan Hou

University of Edinburgh - Business School ( email )

University of Edinburgh
29 Buccleuch Place
Edinburgh, Scotland EH8 9JS
United Kingdom

HOME PAGE: http://www.wenxuanhou.com

Shenwu Jin (Contact Author)

affiliation not provided to SSRN ( email )

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