Abstract
Recent evidence indicates that rapid economic growth in rural China has been accompanied by increased inequality both within and across regions. Much of the increase in intraregional inequality has been attributed to growth of the rural nonagricultural sector. This paper investigates the effect of nonagricultural income on inequality using survey data from a county in central Guangdong Province. For the surveyed households the distribution of nonagricultural income is indeed less egalitarian than that of agricultural income. However, wage income is more equally distributed than income from nonagricultural self-employment. Estimation of men's and women's probabilities of employment indicates that households whose members are self-employed differ systematically from households whose members are wage-earners. The empirical results provide strong evidence that rural development policy which promotes wagetype employment will affect households differently than a policy which emphasizes household-based production.
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