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Long-run relationship between inequality and growth in post-reform China: New evidence from dynamic panel model

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  • Li, Tingting
  • Lai, Jennifer T.
  • Wang, Yong
  • Zhao, Dingtao

Abstract

In this paper, we employ a panel of 27 Chinese provinces from 1984 to 2012 to estimate an autoregressive distributive lag model and find that there exists a robust positive long-run relationship between income inequality and growth in post-reform China. In addition, our estimation results indicate that physical capital investment, especially private capital investment, is a principal driver of the long-run growth in China, whereas the roles of human capital and public capital investment are largely ambiguous and insignificant. We also discuss the implications from comparing our estimation results with those obtained in another study using U.S. data.

Suggested Citation

  • Li, Tingting & Lai, Jennifer T. & Wang, Yong & Zhao, Dingtao, 2016. "Long-run relationship between inequality and growth in post-reform China: New evidence from dynamic panel model," International Review of Economics & Finance, Elsevier, vol. 41(C), pages 238-252.
    • Handle: RePEc:eee:reveco:v:41:y:2016:i:c:p:238-252
    DOI: 10.1016/j.iref.2015.08.009
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    Cited by:

    1. Kanbur, Ravi & Wang, Yue & Zhang, Xiaobo, 2021. "The great Chinese inequality turnaround," Journal of Comparative Economics, Elsevier, vol. 49(2), pages 467-482.
    2. Guanghua Wan & Ting Wu & Yan Zhang, 2018. "The Decline of Income Inequality in China: Assessments and Explanations," Asian Economic Papers, MIT Press, vol. 17(3), pages 115-140, Fall.
    3. Seyi Saint Akadiri & Ada Chigozie Akadiri, 2018. "Growth and Inequality in Africa: Reconsideration," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 4(3), pages 76-86, September.
    4. Olusanya E. Olubusoye & Afees A. Salisu & Sam O. Olofin, 2023. "Youth unemployment in Nigeria: nature, causes and solutions," Quality & Quantity: International Journal of Methodology, Springer, vol. 57(2), pages 1125-1157, April.
    5. Li, Tingting & Wang, Yong, 2018. "Growth channels of human capital: A Chinese panel data study," China Economic Review, Elsevier, vol. 51(C), pages 309-322.
    6. Salisu, Afees A. & Ndako, Umar B. & Oloko, Tirimisiyu F., 2019. "Assessing the inflation hedging of gold and palladium in OECD countries," Resources Policy, Elsevier, vol. 62(C), pages 357-377.
    7. Li, Tingting & Wang, Yong & Zhao, Dingtao, 2016. "Environmental Kuznets Curve in China: New evidence from dynamic panel analysis," Energy Policy, Elsevier, vol. 91(C), pages 138-147.
    8. Khairul Amri & Nazamuddin, 2018. "Is There Causality Relationship Between Economic Growth And Income Inequality?: Panel Data Evidence From Indonesia," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 6(2), pages 8-20.

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    More about this item

    Keywords

    Economic growth; Income inequality; Panel data; Chinese economy;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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