Abstract
An income function analysis is conducted of the 2,400 (rural) counties of China, using cross-section data. Income inequality among counties is considerable and accounts for the major part of inequality among rural households in China. County income per capita is well explained by province, terrain, agricultural type, location, and the relative importance of non-agriculture. Non-agricultural activity, in turn, is strongly assisted by agricultural success. An analysis of time-series data suggests that a process of cumulative causation operated in the decade after the rural reforms of 1978, increasing spatial inequality in rural investment, industrialization, and income. Fiscal redistribution from richer to poorer areas weakened the process but failed to stem it. Copyright 1993 by Oxford University Press.
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