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Inequality and Poverty in China during Reform

Sangui Wang, Dwayne Benjamin (), Loren Brandt (), John Giles (), Yingxing Li and Yun Li

Working Papers PMMA from PEP-PMMA

Abstract: This paper provides an overview of the evolution of income inequality and poverty in China from 1987 to 2002, documenting significant increases of inequality within China's urban and rural populations. In rural areas, increased inequality is primarily related to the disequalizing role of non-agricultural self-employment income and the slow growth in agricultural income from the mid-1990s onward. Poverty persists, and tied in part to slow growth in agricultural commodity prices. In urban areas, the declining role of subsidies and entitlements, the increase in wage inequality, and the layoffs during restructuring have fueled the growth in inequality within urban areas. Poverty levels, however, are very low. China should give more emphasis on education, training, and other human development efforts in its poverty reduction strategy since return to education increased rapidly and became a major source of inequality. A nationwide "social safety net" and an effective redistributive taxation system should be adopted and implemented to ensure that the poor can benefit from the fruits of rapid economic growth.

Keywords: Income inequality; poverty; welfare; growth; reform; transition; policy; China (search for similar items in EconPapers)
JEL-codes: D31 D63 I32 O18 O53 (search for similar items in EconPapers)
Date: 2007
New Economics Papers: this item is included in nep-cna, nep-dev and nep-tra
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Persistent link: https://EconPapers.repec.org/RePEc:lvl:pmmacr:2007-07

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