Income Polarization in the People’s Republic of China: Trends and Changes

Guanghua Wan and Chen Wang ()

No 538, ADBI Working Papers from Asian Development Bank Institute

Abstract: This paper estimates income polarization in the People’s Republic of China (PRC) from 1978 to 2010 and decomposes the estimated polarization by population subgroup. In addition, a framework is proposed to disentangle a change in polarization into a growth and a redistribution component. This framework is then used to quantify the contributions of various income sources to a rise in polarization in the PRC between 2002 and 2007. The analytical results suggest that (1) income polarization exhibited a broadly increasing trend from 1978 to 2010; (2) income polarization was large and rising among rural citizens, while low and declining among urban citizens; polarization of migrants also declined; (3) geographically, income polarization rose in east and particularly central PRC, while west PRC was most polarized with little change over time; and (4) the rise in polarization between 2002 and 2007 was mainly driven by the investment income, followed by transfers. Conversely, business income is polarization-reducing, especially in rural PRC. To a lesser extent, wage is also polarization-reducing, especially among migrants.

Keywords: polarization decomposition; alienation; identification; income distribution; PRC (search for similar items in EconPapers)
JEL-codes: D31 D63 D74 O53 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2015-09-25
New Economics Papers: this item is included in nep-cna, nep-pbe and nep-tra
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Citations: View citations in EconPapers (23)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:adbiwp:0538

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