The Evaluation of the Income Distribution Effect of China's Fiscal Transfer Payment and Personal Income Tax Based on the Growth Rate Curve and the Lorenz Curve of Quantile Regression

Jing Yuan, Zongwu Cai and Yanming Wang
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Jing Yuan: School of Statistics, Shandong Technology and Business University, Yantai, Shandong 264005, China
Zongwu Cai: Department of Economics, The University of Kansas, Lawrence, KS 66045, USA
Yanming Wang: School of Statistics, Shandong Technology and Business University, Yantai, Shandong 264005, China

No 202614, WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS from University of Kansas, Department of Economics

Abstract: Public transfer payments and individual income tax are crucial instruments in China's income redistribution policy system. Based on data from the China Family Panel Studies (CFPS) in 2012, 2020, and 2022, this paper utilizes factual and counterfactual distribution effects of public transfer payments and individual income tax in China. The findings indicate that public transfer payment policies have a significant regulatory effect on the income distribution of the full sample, rural households, and urban households. The income distribution status of rural households can be effectively improved through marital status and education; however, these factors show no significant impact on the full sample or urban households. In 2022, the proportion of middle-income groups among urban households increased to 53%, approaching the ideal level of an "olive-shaped" distribution pattern; nevertheless, the proportion of low-income groups remains high for rural households and the full sample. Public transfer payment policies demonstrate significant effects in †raising the bottom†and †expanding the middle,†whereas the income redistribution effect of individual income tax remains insignificant. Based on these conclusions, the paper proposes that public transfer payment policies should be further tilted towards low- and middle-income rural households to enhance targeting precision, while the individual income tax system requires urgent deepening reforms to effectively improve its efficacy in income distribution regulation.

Keywords: Transfer; paymentsï¼›personal; income; taxï¼›growth; rate; curveï¼›Lorenz; curve (search for similar items in EconPapers)
Date: 2025-10, Revised 2026-05
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