Will Inequality Lead China to the Middle Income Trap?

S. Nazrul Islam

Working Papers from United Nations, Department of Economics and Social Affairs

Abstract: China has departed from the East Asian model of development by letting inequality to rise to a high level, which is contributing to China’s current problems of macroeconomic imbalance, declining efficiency of capital, and rising social tensions. If inequality persists, China may get caught in the “inequality-trap,” which may then lead it to the “middle income trap (MIT).” Fortunately, China still has the levers to pull to reduce inequality and avoid MIT. Measures along both the “wage route” and the “redistributive route” can be adopted for this purpose. In addition, China may pursue the “cooperative route” to more equitable distribution.

Keywords: China; Middle Income Trap; Inequality Trap; Inequality; Redistribution; Cooperatives (search for similar items in EconPapers)
JEL-codes: O1 O4 O5 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2015-07
New Economics Papers: this item is included in nep-sea and nep-tra
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Citations: View citations in EconPapers (7)

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