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Contribution of household income components to the level and rise of inequality in urban China

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  • Satya Paul
  • Zhao Chen
  • Ming Lu

Abstract

This paper investigates how changes in the structure of household income have affected inequality in urban China during the reform period. We conducted an inequality decomposition analysis by income sources using the household-level data from the Chinese Household Income Project Surveys for 1988, 1995 and 2002. The analysis reveals that the contribution of wages and salaries to inequality has declined over the years. Business income, which served as the inequality enhancing component in 1988, has turned into an inequality reducing force in 1995 and 2002. The marginal analysis reveals that 1% increase in business income neutralises about two-thirds of the increase in inequality caused by an equivalent increase in wages and salaries. Some business issues and policy options are discussed.

Suggested Citation

  • Satya Paul & Zhao Chen & Ming Lu, 2017. "Contribution of household income components to the level and rise of inequality in urban China," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 22(2), pages 212-226, April.
    • Handle: RePEc:taf:rjapxx:v:22:y:2017:i:2:p:212-226
    DOI: 10.1080/13547860.2017.1292767
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    References listed on IDEAS

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    8. Gustafsson, Bjorn & Shi, Li, 2001. "The Anatomy of Rising Earnings Inequality in Urban China," Journal of Comparative Economics, Elsevier, vol. 29(1), pages 118-135, March.
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    Cited by:

    1. Edgar J. Wilson & Kankesu Jayanthakumaran & Reetu Verma, 2022. "Urban poverty, growth, and inequality: A needed paradigm shift?," Review of Development Economics, Wiley Blackwell, vol. 26(2), pages 941-961, May.
    2. Kanbur, Ravi & Wang, Yue & Zhang, Xiaobo, 2021. "The great Chinese inequality turnaround," Journal of Comparative Economics, Elsevier, vol. 49(2), pages 467-482.
    3. Ren, Yanjun & Peng, Yanling & Campos, Bente Castro & Li, Houjian, 2021. "Higher minimum wage, better labour market returns for rural migrants? Evidence from China," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 34(1), pages 1814-1835.
    4. Ziyang Zhang & Sen Lan & Fengliang Liu, 2024. "The Evolution of Wealth Inequality in China," Sustainability, MDPI, vol. 16(13), pages 1-20, July.

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