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Income polarization in China: Trends and changes

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  • Wang, Chen
  • Wan, Guanghua

Abstract

This paper estimates income polarization in China from 1978 to 2010 and decomposes the estimated polarization by population subgroups. In addition, a framework is proposed to disentangle a change in polarization into a growth and a redistribution component. This framework is then used to quantify the contributions of various income sources to a rise in polarization in China between 2002 and 2007. The analytical results suggest that (1) income polarization exhibited a broadly increasing trend from 1978 to 2010; (2) income polarization was large and rising among rural citizens, while low and declining among urban citizens; polarization of migrants also declined; (3) geographically, income polarization rose in east and particularly central China, while west China was most polarized with little change over time; and (4) the rise in polarization between 2002 and 2007 was mainly driven by the investment income, followed by transfers. Conversely, business income is polarization-reducing, especially in rural China. To a lesser extent, wage is also polarization-reducing, especially among migrants.

Suggested Citation

  • Wang, Chen & Wan, Guanghua, 2015. "Income polarization in China: Trends and changes," China Economic Review, Elsevier, vol. 36(C), pages 58-72.
    • Handle: RePEc:eee:chieco:v:36:y:2015:i:c:p:58-72
    DOI: 10.1016/j.chieco.2015.08.007
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    3. Ying Yao & Guanghua Wan & Dongfang Meng, 2019. "Income distribution and health: can polarization explain health outcomes better than inequality?," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(4), pages 543-557, June.
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    7. Schettino, Francesco & Gabriele, Alberto & Khan, Haider A., 2021. "Polarization and the middle class in China: A non-parametric evaluation using CHNS and CHIP data," Structural Change and Economic Dynamics, Elsevier, vol. 57(C), pages 251-264.
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    11. Liu, Xueyue & Zuo, Sharon Xuejing, 2023. "From equality to polarization: Changes in urban China’s gender earnings gap from 1988 to 2016," Journal of Economic Behavior & Organization, Elsevier, vol. 205(C), pages 303-337.
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    13. Wang, Jinxian & Caminada, Koen & Goudswaard, Kees & Wang, Chen, 2015. "Decomposing income polarization and tax-benefit changes across 31 European countries and Europe wide, 2004-2012," MPRA Paper 66155, University Library of Munich, Germany.
    14. Xiang Yan & Dong Dong & Shenjing He & Chris Webster, 2020. "Examining Trans-Provincial Diagnosis of Rare Diseases in China: The Importance of Healthcare Resource Distribution and Patient Mobility," Sustainability, MDPI, vol. 12(13), pages 1-12, July.
    15. Giménez Gómez, José M. (José Manuel), 2016. "Linking social heterogeneity and commodity price shocks to civil conflicts," Working Papers 2072/290744, Universitat Rovira i Virgili, Department of Economics.
    16. Sun, Yefei & Wang, Zhaohua & Yang, Tian & Zhang, Bin & Wang, Bo, 2023. "Polycentric cities and income polarization in China: Does city spatial structure matter?," Structural Change and Economic Dynamics, Elsevier, vol. 67(C), pages 380-387.
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    18. Chao Xing & Yuming Zhang & David Tripe, 2024. "Ethical Consumers and Low-Income Sellers on China’s Reward-Based Crowdfunding Platforms: Are Poverty Alleviation Campaigns More Successful?," Journal of Business Ethics, Springer, vol. 191(4), pages 793-810, May.
    19. Li, Chengyou & Jiao, Yong & Sun, Tao & Liu, Anran, 2021. "Alleviating multi-dimensional poverty through land transfer: Evidence from poverty-stricken villages in China," China Economic Review, Elsevier, vol. 69(C).
    20. Wan, Guanghua & Hu, Xiaoshan & Liu, Weiqun, 2021. "China's poverty reduction miracle and relative poverty: Focusing on the roles of growth and inequality," China Economic Review, Elsevier, vol. 68(C).
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    22. Belton M. Fleisher & William H. McGuire & Yaqin Su & Min Qiang Zhao, 2024. "Polarization of employment and wages in China," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 32(1), pages 49-71, January.
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    More about this item

    Keywords

    Polarization decomposition; Alienation; Identification; Income distribution; China;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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