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Decomposing Income Inequality and Policy Implications in Rural China

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  • Lerong Yu
  • Renfu Luo
  • Linxiu Zhang

Abstract

Using village data from samples covering 6 provinces, 36 counties and 216 townships, the income inequalities within and between townships in rural China are assessed. The Theil index and the mean logarithmic deviation methods enable us to test income inequality at the township level, and to decompose it into intra‐regional and inter‐regional at county and provincial levels. In the present paper, we also decompose income inequalities between and within the nationally designated poor counties (NDPC). The results show that approximately two‐thirds of the income inequality in rural China would be eliminated if measures and policies were targeted at the county level. This study also confirms the rationale that China's poverty alleviation strategy of focusing on poor counties based on the inequalities between NDPC and non‐NDPC accounts for the most inter‐province inequality.

Suggested Citation

  • Lerong Yu & Renfu Luo & Linxiu Zhang, 2007. "Decomposing Income Inequality and Policy Implications in Rural China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 15(2), pages 44-58, March.
    • Handle: RePEc:bla:chinae:v:15:y:2007:i:2:p:44-58
    DOI: 10.1111/j.1749-124X.2007.00060.x
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    References listed on IDEAS

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    Cited by:

    1. Li, Yuheng, 2012. "Rural Household Income in China: Spatial-Temporal Disparity and Its Interpretation," Working Paper Series 2012-21, Stockholm School of Economics, China Economic Research Center.
    2. Frank Cowell & Carlo Fiorio, 2011. "Inequality decompositions—a reconciliation," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 9(4), pages 509-528, December.
    3. GOH, Chor-ching & LUO, Xubei & ZHU, Nong, 2009. "Income growth, inequality and poverty reduction: A case study of eight provinces in China," China Economic Review, Elsevier, vol. 20(3), pages 485-496, September.
    4. Frank Cowell & Carlo V. Fiorio, 2010. "GINI DP 4: Inequality Decompositions," GINI Discussion Papers 4, AIAS, Amsterdam Institute for Advanced Labour Studies.
    5. Mehtabul Azam & Vipul Bhatt, 2018. "Spatial Income Inequality in India, 1993–2011: A Decomposition Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 138(2), pages 505-522, July.
    6. Azam, Mehtabul & Bhatt, Vipul, 2016. "Spatial Income Inequality in India, 1993-2011: A District Level Decomposition," IZA Discussion Papers 9892, Institute of Labor Economics (IZA).
    7. Kang Ernest Liu & Hung‐Hao Chang & Wen S. Chern, 2011. "Examining changes in fresh fruit and vegetable consumption over time and across regions in urban China," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 3(3), pages 276-296, September.
    8. Luo, Xubei & Zhu, Nong, 2008. "Rising income inequality in China : a race to the top," Policy Research Working Paper Series 4700, The World Bank.

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