Wealth Accumulation and Distribution in Urban China

40 Pages Posted: 23 Jan 2007  

Xin Meng

Australian National University; IZA Institute of Labor Economics

Date Written: January 2007

Abstract

Under socialism it was neither possible nor necessary to accumulate significant levels of personal wealth. The acceleration of economic reform in the last decade, however, has brought dramatic increases in income and investment opportunities. Reform has also reduced social protections provided by the state welfare system. In response to these changes, between 1995 and 2002, urban average real household net total wealth increased by 24 per cent per annum. There is a concern, however, that those accumulating wealth are the economic and political elites while those unable to accumulate wealth are the most vulnerable workers who are losing social protection. Using Chinese urban survey data of 1995, 1999, and 2002, this paper investigates this issue. It is found that households with above average income have accumulated more wealth than their poorer counterparts. In addition, a large proportion of this wealth accumulation may be from non-earned sources, such as buying larger and better housing at highly subsidized prices. Furthermore, party members and their children have benefited a great deal from this fast wealth accumulation process. Although at lower rates, the poor and vulnerable have also been able to accumulate wealth.

Keywords: wealth, distribution, China

JEL Classification: D31, I30

Suggested Citation

Meng, Xin, Wealth Accumulation and Distribution in Urban China (January 2007). IZA Discussion Paper No. 2553. Available at SSRN: https://ssrn.com/abstract=958717

Xin Meng (Contact Author)

Australian National University ( email )

Research School of Economics
College of Business and Economics
Canberra ACT 0200
Australia
+61 26249 3102 (Phone)

IZA Institute of Labor Economics

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

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