FINANCIAL DEVELOPMENT AND INCOME DISTRIBUTION: A SYSTEM GMM PANEL ANALYSIS WITH APPLICATION TO URBAN CHINA

Zhicheng Liang ()
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Zhicheng Liang: University of Auvergne

Journal of Economic Development, 2006, vol. 31, issue 2, 1-21

Abstract: Financial development has strongly influenced the pattern of income distribution in post-reform China. In this paper, using Chinese provincial data over the period of 1986-2000 and applying the Generalized Method of Moment (GMM) techniques, we investigate the finance-inequality nexus in urban China. Empirical results show that China¡¯s financial development significantly helps to reduce urban income inequality. However, these positive distributional gains from financial sector development have been severely offset by the increased urban unemployment and massive layoffs brought about by the implementation of radical urban reforms and the restructuring of state-owned enterprises.

Keywords: Financial Development; Income Inequality; Chinese Economy (search for similar items in EconPapers)
JEL-codes: D31 G20 P30 (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (46)

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Persistent link: https://EconPapers.repec.org/RePEc:jed:journl:v:31:y:2006:i:2:p:1-21

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