Inequality and Poverty in China During Reform

PEP working paper serie 2007-07

46 Pages Posted: 18 May 2018

See all articles by Dwayne Benjamin

Dwayne Benjamin

University of Toronto

Loren Brandt

University of Toronto - Department of Economics; IZA Institute of Labor Economics

John Giles

World Bank; IZA Institute of Labor Economics; World Bank - Development Research Group (DECRG)

Sangui Wang

Chinese Academy of Social Sciences (CASS) - Institute of Agricultural Economics

Date Written: March 1, 2007

Abstract

This paper provides an overview of the evolution of income inequality and poverty in China from 1987 to 2002, documenting significant increases of inequality within China’s urban and rural populations. In rural areas, increased inequality is primarily related to the disequalizing role of non-agricultural self-employment income and the slow growth in agricultural income from the mid-1990s onward. Poverty persists, and tied in part to slow growth in agricultural commodity prices. In urban areas, the declining role of subsidies and entitlements, the increase in wage inequality, and the layoffs during restructuring have fueled the growth in inequality within urban areas. Poverty levels, however, are very low. China should give more emphasis on education, training, and other human development efforts in its poverty reduction strategy since return to education increased rapidly and became a major source of inequality. A nationwide “social safety net” and an effective redistributive taxation system should be adopted and implemented to ensure that the poor can benefit from the fruits of rapid economic growth.

Keywords: Income Inequality; Poverty; Welfare; Growth; Reform; Transition; Policy; China

Suggested Citation

Benjamin, Dwayne and Brandt, Loren and Giles, John and Wang, Sangui, Inequality and Poverty in China During Reform (March 1, 2007). PEP working paper serie 2007-07, Available at SSRN: https://ssrn.com/abstract=3212698 or http://dx.doi.org/10.2139/ssrn.3173165

Dwayne Benjamin

University of Toronto ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
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416-978-6130 (Phone)
416-978-6713 (Fax)

Loren Brandt

University of Toronto - Department of Economics ( email )

150 St. George Street
Toronto, Ontario M5S 3G7
Canada
416-978-4442 (Phone)
416-978-6713 (Fax)

IZA Institute of Labor Economics ( email )

P.O. Box 7240
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Germany

John Giles

World Bank ( email )

Washington DC
United States

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

World Bank - Development Research Group (DECRG)

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MSN3-311
Washington, DC 20433
United States

Sangui Wang (Contact Author)

Chinese Academy of Social Sciences (CASS) - Institute of Agricultural Economics ( email )

No. 30 Baishi QialLu
HaiDian District, Beijing, 1000
China

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