The Impacts of Financial Development, Urbanization, and Globalization on Income Inequality: A Regression-based Decomposition Approach

Abstract

This paper investigates the impacts of financial development, urbanization, and globalization on income inequality in China by applying a regression-based inequality decomposition approach to panel data on Chinese provinces. Provincial data on urbanization and globalization are combined with new data collected from a unique database of financial development in China compiled at the county level. Our findings suggest that financial development, urbanization, and globalization have a positive impact on income. However, our inequality decomposition suggests that financial development may be particularly important for promoting inclusive growth, since financial development not only stimulates economic growth but is also found to be a factor that reduces inequality.

The Nexus Between Financial Globalization and Income Inequality: The Case of Emerging Market Economies

“…However, they do not statistically find a significant nexus between financial globalization and income inequality, using two-stage least squares (2SLS hereafter) estimation. Lee et al (2019) assert that globalization, urbanization, and financial development affect regional income in China positively. Furthermore, foreign investment reduces regional income inequality.…”

Research on House Price Prediction Based on Multi-Dimensional Data Fusion

“…The Large_Attributes are the larger the independent variable, the larger the dependent variable, that is, the independent variable will have a positive benefit on the dependent variable, in other words, there is a positive correlation between the dependent variable and the independent variable. The processing method for very large attributes is shown in (1).…”

“…Urbanization [1], also known as urbanization and urbanization, refers to the process of population gathering towards cities, the expansion of cities, and the series of economic and social changes that result from it. The essence is the changes in economic, social, and spatial structures.…”

Has Digital Financial Inclusion Narrowed the Urban-Rural Income Gap: The Role of Entrepreneurship in China

“…Since 2000, China's Gini coefficient has been consistently higher than the internationally recognized 0.4 "warning line" [4]. This huge income gap has become an important reason that restricts the economic development of China [5]. Researchers generally believe that the expansion of income gap in China mainly stems from the expansion of income gap between urban and rural areas [6].…”