Fundamental causes of inland–coastal income inequality in post-reform China

Abstract

This paper investigates the fundamental causes of the widening inland-coastal inequality in China during the reform period 1978-2004 within a systematic framework of economic development theory.We highlight the roles of three policy variables, namely globalization, decentralization and marketization, in determining the income gap between inland and coastal regions. The results derived from both time-series and panel data provide strong evidence that these policies are thus far inequality-enhancing. This finding is robust to the use of different estimation methods, alternative proxies for policies and regional income, and the inclusion of other controls. We also find significant but economically small spillover effects from the coastal to inland provinces. Our results suggest that more efforts should be made to improve the policies to reduce regional inequality in China.

Regional growth differences in China for 1995–2013: an empirical integrative analysis of their sources

“…3 Because this paper focuses only on mainland China we exclude the two special administrative regions of Hong Kong and Macao. Other empirical studies using provincial data for mainland China include Wu (2007), Fan and Sun (2008), Hao and Wei (2010), Lin et al (2013), Dreger and Zhang (2014), Yuan and Hamori (2014) and . 4 National Bureau of Statistics of the People's Republic of China website link is http://www.stats.gov.cn/english/.…”

“…Privately-owned businesses increasingly replaced state-owned enterprises, foreign direct investment increased, and exports increased, notably with the accession of China into WTO membership (Tung, 2005;Wu, 2007). However, growth across regions of China has been uneven during the post-reform period (Wei, 2002;Fan and Sun, 2008;Hao and Wei, 2010;Lin et al, 2013).…”

“…Studies of regional growth in China have focused separately on agglomeration economies (e.g., Fan and Scott, 2003;Lu and Tao, 2009;Ke, 2010), exports and foreign direct investment (Wu, 2007;Hao and Wei, 2010;Dreger and Zhang, 2014), household amenity attractiveness (e.g., Liu and Shen, 2014), and housing supply (e.g., Wang and Zhang, 2014;Yuan and Hamori, 2014). Yet, there have not been any studies that have compared the relative importance of labor demand, labor supply and housing supply as sources of regional growth in China using multiple economic indicators as has been done for the US (Partridge and Rickman, 1999;2003;2006;Glaeser and Tobio, 2008;and Rickman and Wang, forthcoming).…”

Rebalancing and Sustaining Growth in China

“…Hao and Wei (2010), Jian et al (1996), Tsui (2007) and Ying (1999) are representative works establishing this notion using provincial GRP per capita data. In these studies it is found that inequality between the inland and coastal regions increased while that within the inland and coastal regions decreased over time.…”

“…They also reached the same conclusion: that there was an increase in inequality between the inland and coastal regions. Hao and Wei (2010) considered GRP per worker and showed that inequality between the inland and coastal regions increased sharply during 1978-2004. They repeated their exercises by excluding the municipalities, and their findings remained the same.…”