Technical change and income inequality in China

Zhang, Xun; Wan, Guanghua; Wang, Chen; Li, Bingbing

doi:10.1111/twec.12531

Cited by 16 publications

(8 citation statements)

References 52 publications

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“…The results show a divergent trend between labor productivity and labor compensation supporting our findings. Robust estimation results (Zhang et al, 2017) show that China's mostly capital-driven technical changes are negatively associated with the share of labor corroborating the results of our study.…”

Section: Discussionsupporting

confidence: 89%

Income inequality in China 1952-2017: persistence and main determinants

Škare

Gil-Alana

Claudio-Quiroga

et al. 2021

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Research background: China's economic growth, however remarkable, is due to the Harrod-Domar nature of economic growth and, therefore, limited. The main limitation lies in the extension of the neoclassical growth model and the government need to decrease regional disparities using new migration, urbanization and social policy. Purpose of the article: It is the rising regional disparity in the total factor productivity to cause the income inequality increase (measured by GINI index) in China from 1952?2017. Our paper brings new insight into the main inequality determinants and causes in China, using a fractional integration modeling framework. Methods: Using fractional integration, we find total factor productivity (TFP), real gross domestic product per capita and growth and expenditures for the social safety net and employment effort to have a statistically significant impact on GINI. Income inequality in China is of a persistent nature with the effects of the shocks affecting the GINI index enduring over time. Findings & value added: The results of this study highlight the importance for model/policy changes by the policy makers and practitioners in China to deal with the inequality issue. This involves improving the growth model through innovation and technological advancement, relaxing TFP dependence on the physical inputs (labor and capital) to reduce income inequality.

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Section: Discussionsupporting

confidence: 89%

Income inequality in China 1952-2017: persistence and main determinants

Škare

Gil-Alana

Claudio-Quiroga

et al. 2021

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“…By estimating a constant elasticity of substitution production function, some studies measure the bias of technology in developed countries including the USA, OECD countries and Japan, and the results show that their technologies appear to be capital biased (David and Van de Klundert, 1965; Klump et al , 2007; Sato and Morita, 2009; Doraszelski and Jaumandreu, 2018). Recent studies use the same method to measure the bias of technology in China, and conclude that the bias of technology in national level is also biased toward capital, which is consistent with that of developed countries (Dong et al , 2013; Zhang et al , 2017). With the increasing intensity of R&D, the influence of developed countries on technological bias in China will be gradually decreasing.…”

Section: Hypothesesmentioning

confidence: 65%

“…As the two examples illustrate, biased technology has a significant impact on both firm hiring decisions and labor status. While some studies have examined the direct effect of biased technology on labor income status in China (Xu and Ouyang, 2015; Zhang et al , 2017), they have ignored the indirect effect of biased technology on labor income status by changing the employment demand of different industries. This paper advances literatures by exploring whether biased technology can affect labor income status through employment.…”

Section: Introductionmentioning

confidence: 99%

The impact of biased technology on employment distribution and labor status in income distribution

Wang

Zhao

Sun

et al. 2019

CMS

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Purpose The purpose of this paper is to examine the effect of biased technology on employment distribution and labor status in income distribution of China. It also testifies a threshold effect of the capital per labor and employment distribution on labor status from biased technology. Design/methodology/approach This paper presents a normalized supply-side system of three equations to measure the bias of technology in China. Linear and threshold regressions approaches are applied over cross-province panel data to investigate the influence which biased technology has on labor status under different capital per labor and employment distribution regimes. Findings This paper empirically shows that technology has been mostly capital-biased in China. The regression results indicate that capital-biased technology impairs labor income status and tend to modify employment distribution and labor income between industries. Furthermore, it reveals the threshold effect of capital per labor and employment distribution on the relationship between biased technology and labor status. Originality/value This paper extends the literature by explaining labor status from the perspective of biased technology and the effect of inter-industry employment distribution in China. It further explores the asymmetric effect of biased technology on labor productivity and income, which promotes inter-industry labor mobility and modifies employment distribution. This paper highlights the implications of this explanation for labor relations and human resource management.

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“…Uneven contribution of factors in distribution can largely explain this urban-rural income disparity. As capitals and other factors intensify, the labor factor is likely to yield inferior payoffs in the tertiary industry (Zhang et al, 2017). Accordingly, industrialization featuring the growth of the tertiary sector tends to structurally reduce the share of labor factor in income distribution.…”

Section: Major Challenges Of Urban-rural Integration and Common Prosp...mentioning

confidence: 99%

Rurbanomics for common prosperity: new approach to integrated urban-rural development

Chen

Mao

Zhou

2022

CAER

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PurposeChallenges from the urban–rural disparity immensely burden the world's progress fulfilling Sustainable Development Goals and the goals' central promise, particularly for developing countries experiencing rapid structural change and urbanization. A knowledge gap lies between the epistemology of urban–rural disparity and the practice of integrated urban-rural development. This paper aims to provide a new approach to bridge the knowledge gap based on the recent Chinese experience.Design/methodology/approachThis qualitative research reviewed major economic and multidisciplinary studies regarding urban-rural development and the growth-equality tradeoff. Chinese experience is employed to showcase concrete challenges from the urban–rural disparity and how the proposed approach works for urban-rural integration.FindingsTheoretical and practical approaches with urban bias largely fail to counter the challenges. Building on China's recent practice probing beyond urban bias, IFPRI (2019) proposes the term rurbanomics with a highlight of equalized urban-rural economic partnership, whereafter Zhou and Chen (2021) enrich the term into a conceptual framework. This paper further improves rurbanomics as a new viable approach to integrated urban-rural development under the overarching goal of common prosperity. The approach prioritizes driving forces in the economic, demographic, eco-environmental, social institutional and technological aspects for the policy community to leverage. Long-term mechanisms are decerned to link urban-rural integration to common prosperity.Practical implicationsChina has leveraged ingredients of the rurbanomics approach in the political deployment to integrated urban-rural development. However, the application of this approach is yet to be adapted with local heterogeneities and live up to application's potential. Long-term mechanisms recommended by the rurbanomics approach will need to be carried out. Future improvements will need substantial theoretical extension and micro-level empirical studies.Originality/valueThis paper streamlines the epistemological shreds regarding pursuits, challenges, global experiences and theoretical approaches of urban-rural development. The paper also develops rurbanomics to navigate urban-rural integration, Sustainable Development Goals and common prosperity. By decerning long-term mechanisms in the Chinese case accordingly, this paper provides clues for other economies to employ the new approach.

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Technical change and income inequality in China

Cited by 16 publications

References 52 publications

Income inequality in China 1952-2017: persistence and main determinants

Income inequality in China 1952-2017: persistence and main determinants

The impact of biased technology on employment distribution and labor status in income distribution

Rurbanomics for common prosperity: new approach to integrated urban-rural development

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