An Analysis of Relationship among Income Inequality, Poverty, and Income Mobility, Based on Distribution Functions

Jiandong Chen,Aifeng Zhao,Fengying Li,Yaqing Si

doi:10.1155/2014/186564

Jiandong Chen, Aifeng Zhao + Show 2 more

Open Access

https://doi.org/10.1155/2014/186564

Copy DOI

Abstract

Many studies show that the relationship among income inequality, poverty, and income mobility needs to be further discussed. Meanwhile, some researches on Distribution Function offer new perspective and methods to analyze this issue. First, this paper expresses the relationship among the Gini coefficient, poverty ratio, and income mobility of 5 common Distribution Functions through math deduction; this finding cannot be found in relevant literatures. Furthermore, an empirical research result proves that the income distribution of urban residents in the period from 2005 to 2010 fits Log-Logistic Distribution. On the basis of the above analysis and empirical data, the paper explores the relations of income inequality, poverty, and income mobility of urban residents and draws some useful conclusions.

Highlights

With the rapid economic development in China, the degree of residential income inequality has been increasing constantly, which, as well as the consequent poverty and the sluggish income mobility, has been restricting the harmonious and steady development of Chinese society severely
The Gini ratio is employed in this paper as the index to evaluate income inequality
As far as the authors are concerned, the study on income inequality cannot be separated from the systematical research of the internal relationship among income inequality, income mobility, and poverty

Summary

Introduction

With the rapid economic development in China, the degree of residential income inequality has been increasing constantly, which, as well as the consequent poverty and the sluggish income mobility, has been restricting the harmonious and steady development of Chinese society severely. As far as the authors are concerned, the study on income inequality cannot be separated from the systematical research of the internal relationship among income inequality, income mobility, and poverty In this way the pattern of residential income distribution can be studied comprehensively, adequately, and dynamically so as to provide a scientific and effective action plan about narrowing the income gap. The third part is the empirical research, in which the authors adopt relevant data of urban residential households classified by absolute income in China City (town) Life and Price Statistics Yearbook from 2006 to 2011 and data of the nationwide average subsistence allowances as well as household average poverty population from 2005 to 2010 published by the Ministry of Civil Affairs and compare the fitting results of different Distribution Functions on urban residential income distribution as well as the income inequality, poverty, and income mobility of urban residents. It is important to note that as the data from Statistic Yearbook of Chinese Urban Life and Prices as well as the Ministry of Civil Affairs is measured by household, the poverty ratio and Gini coefficient in the empirical part of the paper are calculated by household as well

Theoretical Research

Findings

Conclusions and Policy Recommendations