The Decline of Income Inequality in China: Assessments and Explanations*

Guanghua Wan, Ting Wu and Yan Zhang
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Ting Wu: Party School Tianjin Binhai Committee of CPC 540 Jiatai Road, Binhai New Area Tianjin, China, 300450 tina_wu88@126.com Author email: tina_wu88@126.com
Yan Zhang: School of Economics Chongqing Technology and Business University 19 Xuefu Avenue, Nan'an District Chongqing, China, 400067 phd09010@grips.ac.jp Author email: phd09010@grips.ac.jp

Asian Economic Papers, 2018, vol. 17, issue 3, 115-140

Abstract: This paper shows that the trend of worsening income distribution in China has been reversed. We ascertain the robustness of this decline using five nationwide household survey and different inequality indicators. Attempts are then made to uncover the underlying reasons. Major findings include: (1) The decline is largely due to improvement in the distribution of transfer income although its share in the total income is small and diminishing; (2) Occupational income, particularly its component of wage income, plays an important role; and (3) Other drivers include the expansion of the middle-income group, rapid urbanization, and the shrinking disparity within Eastern China.

Date: 2018
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