Measuring inter-provincial income inequality in China: a sensitivity analysis

Abstract

China's regional inequality is a hotly debated topic in the literature, but the fundamental issue of measurement has somehow escaped from the deliberations. In this paper, we select several commonly used income indicators, inequality indices and concepts to measure China's inter-provincial inequality and compare the results. We find China's inter-provincial inequality is very sensitive to different measurements. These sensitivity analyses help us to understand the ongoing debates on China's regional income inequality. We also conduct a cross-country comparison to illustrate the broad ranking of China's regional inequality in the world. We find that China's regional inequality appears not to be as high as usually perceived, despite approaching an alarming level.