Abstract
Based on the review of various methods of estimating Gini coefficient, the paper applies a quintile rule to estimate Gini coefficient of rural areas, urban areas and the whole country using the grouped income data of urban and rural residents. Besides, the paper uses the curve-fitting method to roughly estimate Gini coefficient from eye-catching Hurun Rich List and the latest poverty line. The result shows that the estimation of Gini coefficient using quintile rule is small for both urban and rural area, while the value of the whole country is obviously larger, which is above the warning line of 0.4. It is indicated that the wealth gap mainly comes from the gap between urban and rural areas. On the other hand, the estimation of Gini coefficient using curve-fitting method is as large as more than 0.7, which implies that the wealth gap is highlighted from the analysis of the lowest and highest part of the wealth distribution. All in all, China’s current gap between the poor and the rich is serious. The reform of the income distribution needs to speed up to ensure social harmony and stability.
Highlights
The Italian statistician Gini first introduced inequality index in 1912 in [1]
The result shows that the estimation of Gini coefficient using quintile rule is small for both urban and rural area, while the value of the whole country is obviously larger, which is above the warning line of 0.4
The paper reviews some kinds of frequently-used methods for estimating Gini coefficient, including direct calculation method, grouping method, curve fitting method, distribution function method and decomposition method
Summary
The Italian statistician Gini first introduced inequality index in 1912 in [1]. The index was not designed for describing wealth disparities originally, but offered a statistic for depicting the dispersion of a random variable which was not related with the measure unit. Dalton (1920) applied the index to study the problem of income distribution in [2], and the index was named Gini coefficient. China’s Gini coefficient was 0.412 in 2000, and the value climbed up to 0.465 in 2004 as reported by National Statistic Bureau (NSB). [5] calculated the Gini coefficients of 1988 and 1995 based on the household sampling survey, and the values were 0.382 and 0.445. GBWP Perfect equality Relatively equality Relatively reasonable High income disparity Great income disparity vealed the degree and the trend of Chinese income-disparity They only calculate the coefficients for two years and did not give the calculating method in detail. The report showed that the Gini coefficient of household income was 0.61 in 2010, far above the global average value
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