Is that Really a Kuznets Curve? Turning Points for Income Inequality in China

Martin Ravallion and Shaohua Chen

No 29199, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The path of income inequality in post-reform China has been widely interpreted as “China’s Kuznets curve.” We show that the Kuznets growth model of structural transformation in a dual economy, alongside population urbanization, has little explanatory power for our new series of inequality measures back to 1981. Our simulations tracking the partial “Kuznets derivative” of inequality with respect to urban population share yield virtually no Kuznets curve. More plausible explanations for the inequality turning points relate to determinants of the gap between urban and rural mean incomes, including multiple agrarian policy reforms. Our findings warn against any presumption that the Kuznets process will assure that China has passed its time of rising inequality. More generally, our findings cast doubt on past arguments that economic growth through structural transformation in poor countries is necessarily inequality increasing, or that a turning point will eventually be reached after which that growth will be inequality decreasing.

JEL-codes: D31 I32 O15 (search for similar items in EconPapers)
Date: 2021-08
New Economics Papers: this item is included in nep-cna, nep-gro, nep-isf and nep-ltv
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Published as Martin Ravallion & Shaohua Chen, 2022. "Is that really a Kuznets curve? Turning points for income inequality in China," The Journal of Economic Inequality, vol 20(4), pages 749-776.

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