Income inequality in China: Testing the Kuznets Hypothesis with National Time Series and Provincial Panel Data 1978-2011

Wenli Cheng and Yongzheng Wu

No 32-15, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: This paper investigates income inequality in the post-reform Chinese economy using both national time series and provincial panel data 1978 to 2011. We identify a Kuznets inverted-U relationship between economic development and income inequality and show that this relationship was driven by the process of urbanization. We find that, after controlling for urbanization, low productivity in agriculture relative to that of the economy as a whole (i.e., dualism) and inflation appear to have been significant contributing factors to income inequality. There is also some evidence to suggest that, the expansion of higher education may have widened income inequality, but the expansion of secondary education may have narrowed it.

Keywords: Kuznets curve; income inequality in China; Theil index; urbanisation; dualism (search for similar items in EconPapers)
JEL-codes: O15 O53 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2015-05
New Economics Papers: this item is included in nep-cna, nep-his and nep-tra
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