China's Income Distribution and Inequality

Jeffrey Perloff and Ximing Wu (wuximing05@gmail.com)

No 316, Econometric Society 2004 North American Summer Meetings from Econometric Society

Abstract: We use a new method to estimate China’s income distributions based on publicly available interval summary statistics from China’s largest national household survey. We examine rural, urban, and overall income distributions for each year from 1985-2001. By estimating the entire distributions, we can show how the distributions change directly as well as examine trends in traditional welfare indices such as the Gini. We find that inequality has increased substantially in both rural and urban areas. Using an inter-temporal decomposition of aggregate inequality, we determine that increases in inequality within the rural and urban sectors and the growing gap in rural and urban incomes have been equally responsible for the growth in overall inequality over the last two decades. However, the rural-urban income gap has played an increasingly important role in recent years. In contrast, only the growth of inequality within rural and urban areas is responsible for the increase in inequality in the United States, where the overall inequality is close to that of China. As a robustness check, we show that consumption inequality (which may be a proxy for permanent income inequality) in urban areas also rose considerably

Keywords: income distribution; inequality; maximum entropy (search for similar items in EconPapers)
JEL-codes: C1 I32 (search for similar items in EconPapers)
Date: 2004-08-11
New Economics Papers: this item is included in nep-tra
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Citations: View citations in EconPapers (8)

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