Will Inequality Lead China to the Middle Income Trap?

Nazrul Islam ()
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Nazrul Islam: Department of Economic and Social Affairs, United Nations; International Center for the Study of East Asian Development (ICSEAD), Kitakyushu, Japan

Frontiers of Economics in China-Selected Publications from Chinese Universities, 2014, vol. 9, issue 3, 398-437

Abstract: China has departed from the East Asian development model by letting inequality rise to a high level, which is now 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 to the middle income trap (MIT). Fortunately, China still has the levers to pull to reduce inequality and avoid the 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)
Date: 2014
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Citations: View citations in EconPapers (7)

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