When economic reform is faster than statistical reform - measuring and explaining inequality in rural China

Martin Ravallion () and Shaohua Chen

No 1902, Policy Research Working Paper Series from The World Bank

Abstract: Official tabulations from household survey data suggest rising income inequality in post-reform rural China, a trend of public concern. But the structural changes in China's rural economy have not been properly reflected in the methods used to process raw survey data. Using micro data from four provinces, the authors find that two-thirds of the conventionally measured increase in inequality in 1985-90 vanishes when market-based valuation methods are used and allowances are made for regional cost-of-living differences. The data revisions also suggest somewhat different explanations for rising inequality. Nonfarm income was secondary to grain production. While access to farm land was relatively equal, higher returns to land over time were inequality-increasing. But holding other factors constant, lower returns to physical capital reduced inequality over time, as did private transfers.

Keywords: Economic Theory&Research; Poverty Impact Evaluation; Services&Transfers to Poor; Environmental Economics&Policies; Labor Policies; Services&Transfers to Poor; Rural Poverty Reduction; Inequality; Poverty Impact Evaluation; Safety Nets and Transfers (search for similar items in EconPapers)
Date: Written
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