Income Inequality in the People's Republic of China: Trends, Determinants, and Proposed Remedies

Wang, Chen; Wan, Guanghua; Yang, Der‐Ching

doi:10.1111/joes.12077

Cited by 89 publications

(19 citation statements)

References 80 publications

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“…Most of these studies agree that openness has contributed to growth at the expense of widening income gaps. High levels of inequality also mean that the bottom 10% of society may not be able to afford financial investment or human capital development (Wang, Wan, & Yang, 2014).…”

Section: Gini and Economic Growthmentioning

confidence: 99%

The income inequality, financial depth and economic growth nexus in China

2019

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Income inequality has increased in China despite rapid economic growth. Income inequality could impinge on future development, leading to social tension or political instability. Our study investigates the short‐run and long‐run relationship between three important macroeconomic indicators—income inequality, economic growth and financial depth. We utilise a two‐step procedure of ARDL bounds and Granger causality for the analysis. The bounds test indicates the presence of a cointegrating relationship between income inequality, financial depth and economic growth in the long run. In the second step, we utilise the Granger causality approach. Results show a bidirectional causality between financial depth‐growth and a unidirectional causality between inequality‐growth in the short run. In the long run, results reveal that growth and financial depth determine Gini. Our findings provide support for the inequality‐widening effect due to economic growth and higher credit provided to the private sector. We find no evidence of inequality‐narrowing or income‐equalising effect in the long run for the period of study. It is possible that the government's inclusive growth policies which started less than a decade ago have not taken effect for us to capture the inverted U‐shape income equalising effect significantly.

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Section: Gini and Economic Growthmentioning

confidence: 99%

The income inequality, financial depth and economic growth nexus in China

2019

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“…Rising inequality has been ranked among the top socioeconomic issues for decades in China. Despite a large literature on this topic (Wan, , ; Wang, Wan, & Yang, ), much more research efforts are called for to explore what drive the rising inequality. One major driver is technical change (Acemoglu, , ).…”

Section: Summary and Concluding Remarksmentioning

confidence: 99%

Technical change and income inequality in China

Zhang

Wan²,

Wang

et al. 2017

World Economy

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The purpose of this paper was to explore the inequality–technical change relationship. Different from earlier studies, we aim to gauge the impact of technical change on the overall inequality, not just a particular component of inequality. This is achieved by establishing that the labour share of income is negatively correlated with overall inequality as indicated by the popular Gini coefficient and by modelling the labour share of income as a function of technical change. The empirical model of labour share of income is estimated using 1978–2012 provincial panel data from China. The main estimation results show that technical change in China had been mostly capital‐biased. It contributed to the successive reductions in China's labour share of income and thus rapid rises in income inequality.

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“…A typical view in the literature is that, at least until recently, the reform era has seen a rise in regional inequality, along with a rise in interhousehold and urban-rural inequality (Wang et al, 2014). These concerns are very apparent in China, where policymakers want to coordinate the development of various regions and where both academic literature and media have paid increased attention to regional inequality.…”

Section: Discussionmentioning

confidence: 99%

“…For example, a review covering interhousehold inequality, regional inequality, and urban-rural inequality argued for a similar upward trend in all three types of inequality in China from the early 1980s until about 2010 (Wang, Wan, & Yang, 2014). So the growing attention by scholars was to a "problem" that by one measure was shrinking.…”

Section: Perceptions About Rising Regional Inequality In Chinamentioning

confidence: 99%

Regional inequality in urban China, allowing for spatial cost of living differences: Evidence from a hedonic analysis of apartment prices

Gibson

Boe‐Gibson

2019

Asia & Pacific Policy Stud

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Studies of inequality in China typically ignore cost of living differences between areas. Under the Balassa-Samuelson effect, nontradeables cost more in richer areas, so nominal inequality exceeds real inequality. This especially matters in China, where spatial cost of living differences should grow with recent development of urban housing markets. We use new data on apartment prices in 104 cities in China to develop housingrelated spatial deflators. The level of spatial inequality in urban China is overstated by 27% if cost of living differences are ignored. Our hedonic analysis of 41,000individual apartment sales shows that most price variation is between areas, rather than from features of individual apartments. The dominant trend in the reform era is for regional inequality in China to decline, contrary to the common perceptions. In nominal terms, the Theil index for interprovincial inequality in 2016 is just 46% of its 1978 level. The current results imply that the fall in inequality in real terms would be even greater.This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.

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Income Inequality in the People's Republic of China: Trends, Determinants, and Proposed Remedies

Cited by 89 publications

References 80 publications

The income inequality, financial depth and economic growth nexus in China

The income inequality, financial depth and economic growth nexus in China

Technical change and income inequality in China

Regional inequality in urban China, allowing for spatial cost of living differences: Evidence from a hedonic analysis of apartment prices

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