China's Income Distribution Over Time: Reasons for Rising Inequality

38 Pages Posted: 27 Feb 2004

See all articles by Ximing Wu

Ximing Wu

Texas A&M University - Department of Agricultural Economics

Jeffrey M. Perloff

University of California, Berkeley - Department of Agricultural & Resource Economics

Date Written: February 2004

Abstract

We use a new method to estimate China's income distributions using publicly available interval summary statistics from China's national household survey. We examine rural, urban, and overall income distributions for each year from 1985-2001. By estimating the entire distributions, we can show how the distributions change directly as well as examine trends in traditional welfare indices. We find that inequality has increased substantially in both rural and urban areas. Using an inter-temporal decomposition of aggregate inequality, we determine that increases in inequality within the rural and urban sectors and the growing rural-urban income gap have been equally responsible for the growth in overall inequality over the last two decades. However, the rural-urban gap has played an increasingly important role in recent years. In contrast, only the growth of inequality within rural and urban areas is responsible for the increase in inequality in the United States, where the overall inequality is close to that of China. We also show that urban consumption inequality (which may be a better indicator of economic well-being) rose considerably.

Keywords: Income distribution, inequality, China, rural and urban areas

JEL Classification: O15, O18, O53

Suggested Citation

Wu, Ximing and Perloff, Jeffrey M., China's Income Distribution Over Time: Reasons for Rising Inequality (February 2004). Available at SSRN: https://ssrn.com/abstract=506462 or http://dx.doi.org/10.2139/ssrn.506462

Ximing Wu (Contact Author)

Texas A&M University - Department of Agricultural Economics ( email )

College Station, TX 77843-4218
United States

HOME PAGE: http://agecon2.tamu.edu/people/faculty/wu-ximing/

Jeffrey M. Perloff

University of California, Berkeley - Department of Agricultural & Resource Economics ( email )

207 Giannini Hall
Berkeley, CA 94720
United States
510-642-9574 (Phone)
510-643-8911 (Fax)

HOME PAGE: http://are.berkeley.edu/~perloff

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