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Regional income inequality in China revisited: A perspective from club convergence

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  • Tian, Xu
  • Zhang, Xiaoheng
  • Zhou, Yingheng
  • Yu, Xiaohua

Abstract

Growing income inequality in China has elicited considerable concern, and consensus has not been reached regarding whether regional income converges into one common steady state. The controversy may be attributed to the various definitions and methodologies for testing convergence. This study analyzes regional income inequality and convergence in China from the perspective of club convergence proposed by Phillips and Sul (2007). Instead of one convergence at the national level, we determine that provincial incomes are converging into two clubs: seven east-coastal provinces (Shanghai, Tianjin, Jiangsu, Zhejiang, Guangdong, Shandong, and Fujian) and Inner Mongolia are converging into a high income club, and the remaining provinces are converging into a low income club. In addition, we obtain strong evidence that income inequality within a club decreases, while that between clubs deteriorates over time. Between-club inequality is associated with investment in physical and human capital, as well as population growth rates.

Suggested Citation

  • Tian, Xu & Zhang, Xiaoheng & Zhou, Yingheng & Yu, Xiaohua, 2016. "Regional income inequality in China revisited: A perspective from club convergence," Economic Modelling, Elsevier, vol. 56(C), pages 50-58.
    • Handle: RePEc:eee:ecmode:v:56:y:2016:i:c:p:50-58
    DOI: 10.1016/j.econmod.2016.02.028
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    More about this item

    Keywords

    Regional inequality; Logt test; Club convergence; China;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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