Ravi Kanbur, Yue Wang, Xiaobo Zhang — The great Chinese inequality turnaround

Summary

Sharply increasing inequality became an integral part of the narrative on Chinese development since the beginning of the reform process in 1978. Over the past decade, however, many studies have argued that inequality has been plateauing, or even declining. This column uses several datasets, including household surveys and regional-level government statistics, to show evidence of a mitigation of inequality in the early 21st century, and indeed, declining rates over recent years. Possible drivers of this turnaround are urbanisation, transfer and regulation regimes, and tightening rural labour markets.…

Conclusion

Thus, transfer and regulation regimes, combined with tightening labour markets in rural areas, have acted to mitigate inequality in China. Some evidence of this is found in Tables 2 and 3, which show the income share for each of a number of income sources and the Gini coefficients of income from each source. Inequality of wage income has fallen sharply, as has inequality of transfers. These are the dominant factors in total income, so their declining inequality is the dominant factor in the inequality turnaround. Further details of these calculations and interpretations are given in Kanbur et al. (2017).

VOX.euThe great Chinese inequality turnaround
Ravi Kanbur, Yue Wang, Xiaobo Zhang