The Chinese economy and income inequality among East Asian countries

Abstract

Using the Atkinson inequality measure of income distribution, we analyze the impact of China as a single country and examine the effect of its domestic income inequality on total income inequality among East Asian countries. First, we find that China's domestic income inequality has increased since 1990. However, the inequality of China's domestic income distribution is still at a low level among East Asian countries as a whole. Second, the growth of China's per capita gross domestic product (GDP) had an equalizing effect on income distribution in a framework of Association of South East Asian Nations (ASEAN) + China, but this effect was reversed around 1997. However, relative to higher income countries such as Japan and South Korea, China's per capita GDP remains low, and although China has in the past contributed to income inequality in the area, it has recently had a more equalizing effect.