The Trend of the Gini Coefficient between Chinese Rural and Urban Residents from 1978 to 2008

Abstract

This paper explores a new mathematical model to evaluate income inequality between urban and rural residents quantitatively. It finds that as the urban population increases, the income inequality between rural and urban residents will first rise and then fall. These findings are applied to examine Chinese rural-urban income disparity from 1978 to 2008 and the results show that the rise of the urban population, rather than the enlargement of the income gap between urban and rural residents, plays the major role in the increase of the Gini ratio between rural and urban inhabitants from 1978 to 2001, whereas after 2001 the further increases in the urban population tended to narrow the urban-rural income disparity. The results show that the key factor determining urban-rural disparity is the process of urbanization.