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The Decline of Income Inequality in China: Assessments and Explanations

Author

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  • Guanghua Wan

    (School of Economics Chongqing Technology and Business University 19 Xuefu Avenue, Nan'an District Chongqing, China, 400067 Author email: guanghuawan@yahoo.com)

  • Ting Wu

    (Party School Tianjin Binhai Committee of CPC 540 Jiatai Road, Binhai New Area Tianjin, China, 300450 tina_wu88@126.com Author email: tina_wu88@126.com)

  • Yan Zhang

    (School of Economics Chongqing Technology and Business University 19 Xuefu Avenue, Nan'an District Chongqing, China, 400067 phd09010@grips.ac.jp Author email: phd09010@grips.ac.jp)

Abstract

This paper shows that the trend of worsening income distribution in China has been reversed. We ascertain the robustness of this decline using five nationwide household survey and different inequality indicators. Attempts are then made to uncover the underlying reasons. Major findings include: (1) The decline is largely due to improvement in the distribution of transfer income although its share in the total income is small and diminishing; (2) Occupational income, particularly its component of wage income, plays an important role; and (3) Other drivers include the expansion of the middle-income group, rapid urbanization, and the shrinking disparity within Eastern China.

Suggested Citation

  • 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.
    • Handle: RePEc:tpr:asiaec:v:17:y:2018:i:3:p:115-140
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    References listed on IDEAS

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    2. 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).
    3. Martin Ravallion & Shaohua Chen, 2022. "Is that really a Kuznets curve? Turning points for income inequality in China," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 20(4), pages 749-776, December.
    4. Wang, Haining & Cheng, Zhiming & Smyth, Russell & Sun, Gong & Li, Jie & Wang, Wangshuai, 2022. "University education, homeownership and housing wealth," China Economic Review, Elsevier, vol. 71(C).
    5. Hu, Xiaoshan & Wan, Guanghua & Zuo, Congmin, 2023. "Education expansion and income inequality: Empirical evidence from China," BOFIT Discussion Papers 7/2023, Bank of Finland Institute for Emerging Economies (BOFIT).
    6. Guanghua Wan & Chen Wang & Yu Wu, 2021. "What Drove Housing Wealth Inequality in China?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 29(1), pages 32-60, January.

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