Fleshing Out the Olive? On Income Polarization in China

Martin Ravallion and Shaohua Chen

No 29383, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In a rare example of an explicit national goal for income distribution besides reducing poverty, China’s leadership has recently committed to expanding the middle-income share—moving to a less polarized “olive-shaped” distribution. Recognizing the potential trade-offs, the paper asks whether China’s experience indicates that income-polarization was a by-product of past economic progress, including poverty reduction. The paper does not find robust time-series evidence of polarizing effects alongside either economic growth or population urbanization (including among those below the national median). There was strong co-movement between polarization and inequality. Larger urban-rural gaps in mean incomes are strongly polarizing in China.

JEL-codes: I32 O15 (search for similar items in EconPapers)
Date: 2021-10
New Economics Papers: this item is included in nep-cna and nep-ltv
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