Income In China Research Articles

Mechanism and empirical evidence on new-type urbanization to narrow the urban-rural income gap: Evidence from China's provincial data.

The main component of China's income gap is the urban-rural income gap, which is largely affected by urbanization. It is worth studying how new-type urbanization affects the income gap between urban and rural areas. Research mostly focuses on the urbanization rate as the core explanatory variable to explain the impact using one or two factors. This paper analyzes the mechanism of the effect using a comprehensive number of factors, with the quality of new-type urbanization development as the core explanatory variable. In terms of theoretical research, we believe that new-type urbanization affects the urban-rural income gap by promoting the transfer of labor, changing industrial structure, and policy tendency. Using both static and dynamic empirical analyses, we test the impact of new-type urbanization on the urban-rural income gap based on China's provincial data. We find that new-type urbanization is conducive to narrowing the income gap between urban and rural areas. The transfer of labor significantly reduces the urban-rural income gap. However, the upgrading of industrial structure will enlarge the gap. The impact of China's policy orientation is negligible. Policy should focus on promoting urbanization and improving the marginal rate of return of agriculture, improve the level of human capital, reverse the mismatch between employment structure and industrial structure, increase support for rural areas, and make substantial progress in promoting common prosperity.

Research on the income distribution effect of factor allocation efficiency changes among China's three major industries.

This paper aims to study the impact of correcting the factor misallocation among China's three major industries on China's income gap and income distribution pattern. By using the industry Panel data at the provincial level in China, we measure the degree of factor misallocation among the three major industries in China's provinces from 2002 to 2019 by building a factor misallocation measurement model, and then uses reverse thinking to compare the income gap under the condition of no factor misallocation with the actual income gap, and then obtains the impact of factor misallocation on the income gap, And use this method to focus on analyzing the impact of factor allocation efficiency changes among the three industries on income distribution pattern. The research finds that: (1) There is a serious factor misallocation among the three major industries in each province. From the perspective of subdivided factors, the factor misallocation among the three major industries in China's provinces is mainly caused by labor misallocation. Factor misallocation shows a trend of convergence first and then divergence among regions. (2) There is a strong heterogeneity in the explanatory power of different dimensions of the income gap of factor misallocation among the three major industries in China's provinces. Among them, correcting the misallocation of total factors among the three major industries in China's provinces can only narrow the internal income gap of the tertiary sector of the economy, and expand the internal income gap between the primary and secondary industries. (3) The impact of correcting the total misallocation, capital misallocation and labor misallocation among the three industries on the income gap among industries or provinces is narrowing first and then expanding. (4) Further research shows that although the level of factor misallocation among provinces in China is significantly lower than the average level of factor misallocation among the three major industries within each province, it has a stronger explanatory power for the inter-provincial income gap. Correcting the total factor misallocation and labor misallocation among provinces can significantly reduce the inter-provincial income gap in China. Correcting the total factor misallocation and labor misallocation among provinces in 2019 can reduce the inter-provincial income gap by 51.48% and 81.68% respectively. Only correcting the capital misallocation among provinces will expand the inter-provincial income gap, and only correcting the capital misallocation among provinces in 2019 will expand the inter-provincial income gap by 112.21%.

Risk-free rate puzzle: An explanation of the heterogeneity of consumer risk attitudes under China's income gap

The original C-CAPM encounters a risk-free rate puzzle, making it difficult for the capital and consumer markets to achieve equilibrium. This problem can be addressed by solving this risk-free rate puzzle. In this paper, we propose that a representative consumer in the C-CAPM does not reflect the reality of China's social development. Second, we introduce three kinds of typical consumers, low-, middle- and high-income consumers, to embody the heterogeneity of risk attitudes. From the perspective of the consumer Pareto optimum, we derive the new C-CAPM and risk-free rate equation. Third, we compare the new model with the original C-CAPM and risk-free rate equation and theoretically explain this equation. Using monthly data on social consumption in China from 2011 to 2019, we find that the income gap in China is the underlying reason for this risk-free rate puzzle.

Study on Whether International Trade Has Increased the Inequality in China's Domestic Income Distribution

Inequality in income distribution is a major problem faced in China's and even global development, and has traditionally attracted much academic attention. How to reduce the income distribution gap and achieve common prosperity has also been an important concern of the government for a long time. Meanwhile, foreign trade plays a pivotal role in China's economic development, and along with the changes in the external trade environment and internal economic policies, the country is witnessing a new situation of full openness in all regions. Based on the above background, this paper investigates whether there is an impact of foreign trade on China's income distribution. The empirical results show that foreign trade has increased the income distribution inequality in China, and the impact of export trade on intra-regional income inequality is greater than that of import trade on intra-regional income inequality; the impact of export trade on income inequality in coastal cities is greater than that in inland cities, when viewed by coastal and inland. Finally, based on the empirical results, this paper puts forward three suggestions on narrowing the inequality of domestic income distribution: reasonable guidance of foreign investment, optimization of industrial structure, and increasing the cultivation of talents.

Correction of China's income inequality for missing top incomes

AbstractAfter accounting for top incomes missing from the Chinese Household Income Project, this paper examines the income inequality trend in China during the 21st century. Our analysis, which involves fitting the upper tail of the income distribution to a power‐law model, reveals that the authoritative income survey data miss 0.68% of the population and 6.19% of aggregate income in 2018. Despite the most recent survey data providing better coverage of top incomes, our correction is still crucial. The raw survey data indicate a consistently increasing Gini coefficient between 2002 and 2018, but the corrected index starts to decline from 2013. Meanwhile, the revised top 1% income share increases from 7.01% in 2002 to 7.89% in 2013 and then slightly decreases to 7.64% in 2018, while the revised top 10% income share stabilises at around 33% throughout the period. Notably, China's revised top 10% and top 50% income shares in 2018 are close to those of the United Kingdom but are considerably lower than those of the United States.

Tax incentive and firm investment: Evidence from the Income Tax Revenue Sharing Reform in China

AbstractHow to stimulate enterprise investment is a dilemma facing most countries, and tax incentives are frequently used as a solution. This study explores how China's Income Tax Revenue Sharing Reform affected enterprises' fixed asset investment (FAI). This reform did not modify the nominal tax rate or depreciation allowance directly but changed the effective enterprise income tax (EIT) rate via switching tax administration indirectly. And the change in the effective EIT rate should affect firm investment. This paper uses a regression discontinuity (RD) design to conduct a quasi‐natural experiment of the reform in 2002 based on an enterprise‐level dataset from the Annual Survey of Industrial Enterprises (ASIE). After the reform, the effective EIT rate (ETR) of enterprises collected by the State Administration of Taxation (SAT) was 11% lower than that collected by the Local Administration of Taxation (LAT). FAI improves by 0.7% for every 1% decrease in ETR. Tax avoidance is a key channel for the ETR to affect FAI. The FAI of smaller companies, non‐state‐owned enterprises (SOEs) and companies with high size‐age (SA) indexes has responded more significantly to the change in ETR brought about by reform.

Literature review on education expansion and income gap in China

Since the reform and opening up, China's per capita years of education and college enrollment rate have been greatly improved. The impact of educational expansion on China's income gap has aroused widespread concern in the academic community. In this paper, the theoretical research and empirical analysis of education expansion and income gap are sorted out, and the related theoretical research at home and abroad are classified into three categories: education expansion has inhibition, promotion and comprehensive effects on income gap. In the empirical analysis, the paper summarizes the functional relationship between education expansion and income gap in China, and the heterogeneity analysis of income of different groups due to the expansion of different education levels.

Econometric analysis of factors influencing Chinese tourist visits to New Zealand

• Utilise the SARIMAX model to analyse tourist flow. • Investigate key factors that influenced Chinese tourist visits to New Zealand. • China's income, NZ's travel/tourism sectors, bilateral trade grow Chinese tourists. • Tourism prices, online visa application, exogenous shock reduce Chinese tourists. • Benefit NZ's policymakers in planning to attract lucrative Chinese tourists.

Tourism, transport infrastructure and income inequality: A panel data analysis of China

ABSTRACT This study investigated the dynamic relationship between tourism, transport infrastructure, and income inequality using the novel panel data of China over 2000–2018. The results show the bidirectional Granger causality between highway and tourism and a unidirectional Granger causality running from railway to tourism for the national sample. Tourism significantly affects China's income inequality; however, this impact is minimal. Besides, tourism and transport infrastructure have a synergy effect on China's income inequality. Given the importance of tourism and transport infrastructure to economic growth in many developing countries, this study is conducive to broader debates over the role of transport infrastructure in tourism-induced inclusive growth in its policy implications for national development strategies and equitable development.

The relationship between China's income inequality and transport infrastructure, economic growth, and carbon emissions

AbstractSince the beginning of the 21st century, accompanied by the tremendous achievements of China's economic growth is an increasingly severe income gap between the rich and the poor. Based on panel data from 2000 to 2018, this study systematically examined the relationship among transport infrastructure, economic growth, carbon emissions, and income inequality in China, using the panel vector autoregressive model estimated by the generalized method of moments. We further divided China into three regions to investigate the regional heterogeneity of these relationships. The results show a long‐run equilibrium relationship between transport infrastructure, economic growth, carbon emissions, and income inequality. Income inequality in the previous year significantly affects that in the current year positively. Whether at the national or regional level, economic growth affects income inequality negatively. For the national sample, the highway reduces income inequality, while the railway increases income inequality. For both the subsamples and the national sample, carbon emissions significantly increase income inequality and are the Granger test cause for income inequality. Furthermore, we discuss some of the possible mechanisms of these results. Our findings generate policy implications for reducing income inequality in regard to economic growth, transport infrastructure, and carbon emissions.

Income comparison and happiness: The role of fair income distribution

AbstractRelative income gap is one of the most popular approaches for explaining the income–happiness relationship. We argue in this article that when people compare their incomes, they care about distributional fairness more than relative income disparity. It is difficult for us to explain China's income–happiness paradox if we simply compare the income gap and do not explore the income‐generation process leading to income inequality. We therefore employ an approach based on a responsibility‐sensitive theory of justice that decomposes individual income into fair and unfair components. As a proxy for distributional unfairness, unfair income is considered the main source of unhappiness. Using data from the Chinese Household Income Project survey, we find strong support for the negative relationship between income unfairness and happiness. We also find a significantly positive relationship between the relative income gap and income unfairness, which leads us to consider the income comparison hypothesis as the explanation for the income–happiness paradox in a new light. Sensitivity analyses confirm the robustness of our results.

Economic growth, income inequality and life expectancy in China.

China had made dramatic health gains before its economic reform that began in 1978 produced rapid economic growth in the ensuing years. Since the economic reform, China's income inequality has substantially increased, and health gains have stagnated. This article investigates the extent to which China's health stagnation may be attributable to the rise in income inequality in China. By simulating the improvement in life expectancy that could have resulted if, ceteris paribus, income inequality had stayed constant at the lowest level after the founding of the People's Republic of China in 1949, we find that the sharply increasing income inequality in China has contributed to life loss in China's population, about 0.6 years for men and 0.4 years for women. These findings suggest that redistribution of income from rich to poor may be one of the most important policy levers for improving population health in China.

Comments on Assessment of the Trade Integration Pattern Between the Russian Federation and East/Southeast Asian Economies Using the Panel Gravity Framework

Comments on Assessment of the Trade Integration Pattern Between the Russian Federation and East/Southeast Asian Economies Using the Panel Gravity Framework

Towards a Utilitarian Social Welfare Function—Income Inequality and National Welfare Growth in China

Since the beginning of the reform period, China's income inequality has increased. However, loss of national welfare and the impact of income inequality on the growth of national welfare has not been adequately assessed. The result is that any development model myopically focusing on efficiency and ignoring equality cannot maximize growth in national welfare. Grounded in utilitarian theory, this paper builds a national welfare function which incorporates the Gini coefficient and demonstrates the negative effects of income inequality on China’s national welfare. We then provide a welfare-loss formula of income inequality and another formula to calculate the influence of income inequality change on national welfare growth. Our calculations show that from 1996 to 2010, the average welfare-loss rate of China’s residents' income inequality was 8.08%, with absolute welfare loss increasing1.44 times; while the relative impact of Gini coefficient increases on national welfare growth was (-) 8.66%.

China's income inequality in the global context

Summary Although China's GDP has become the world's second largest, China's long-term economic growth with high speed and long-lasting “efficiency first” policy guidance, has brought China into a complicated situation, therein serious inequality exists in China and it has become one of the most serious problems in China nowadays. This paper focuses on China's inequality issues in the context of the world, especially on comparison between China and the European countries, concerning of our common pursuit for socialist values. Comparative method is widely used in the paper. Gini Coefficient and Percentage of Total Income of National Population by Income Quintile are utilized as main indicators, and the two results just mutually verify each other. We find that the huge inequality in China does not fit into the title of socialist country and its socialist extent is far less than the European's, even inferior to typical capitalist countries. Finally, we make a ladder target of the Gini coefficient standards for Chinese government to keep constraint by oneself.

Dynamic panel data approaches for estimating oil demand elasticity

AbstractThis study examines the general relationships between crude oil consumption, real oil price and real GDP using a quarterly time series from 1993 to 2012. Specifically, the long‐term and short‐term GDP and price elasticities of oil consumption per capita were estimated using dynamic panel and pooled data regressions based on Nerlove's oil demand model for 25 countries that represent 75 per cent of global oil demand. Price elasticities were found for most OECD countries. These estimates were low and consistent with previous estimates. According to the study results, the short‐run price elasticity ranged between −0.05 and −0.20 and the long‐run between −0.11 and −0.36. Price elasticities for most non‐OECD countries were either positive or insignificant. Estimates of GDP elasticities varied. The short‐run GDP elasticity was between 0.15 and 1.09, while the long‐run was between 0.21 and 1.54. On average, income elasticity for OECD countries was found to be slightly higher than for non‐OECD countries. Contrary to expectations, we found China's income elasticity to be 0.34 in the short run, but it was 0.76 in the long run.

Analysing the environmental Kuznets curve for CO<SUB align="right">2 emissions in China using segmented equations and partial least squares

This study investigates the dynamic relationship between economic growth and CO2 emissions in China from 1979 to 2010. We propose a segmented equation for the environmental Kuznets curve (EKC). The partial least squares method is used to estimate the equation parameters. The conclusions drawn are as follows: 1) China's CO2 emissions are still in the first stage of the EKC. A significant increase in income per capita is needed for China's CO2 emissions per capita to reach its peak point in the inverted U-shaped EKC; 2) the ideal equation used to simulate the relationship between China's income per capita and CO2 emissions per capita after 2010 is In(Ct) = −13.3568 + 3.1708In(It) − 0.1608(In(It))2. This equation can help China's government set its ideal CO2 control target at a specific income per capita, at least until the income per capita reaches RMB 19,137.2; 3) China's CO2 emissions per capita will peak some time between 2026 and 2027. After 2027, China's CO2 emissions per capita will decrease as income per capita increases.

Intergenerational transfer of human capital and its impact on income mobility: Evidence from China

This paper analyzes theoretically and empirically the impact of intergenerational transmission of human capital on the income mobility in China. We use a three-period overlapping-generations (OLG) model to show that the human capital transfer plays a remarkable role in determining the parent-to-offspring investment in human capital and the intergenerational elasticity of income. We then estimate a simultaneous equations model (SEM) using the 1989–2009 China Health and Nutrition Survey (CHNS) data to verify our theoretical predictions. The results show that (i) human capital, measured by health and education, is directly transmitted from one generation to the next, reflecting the parent-induced inequality of development opportunities among offspring in China; (ii) the estimated intergenerational income elasticity increases from 0.429 to 0.481 when the direct transfer of human capital is accounted for, suggesting that omitting this mechanism would overestimate China's income mobility. Our findings provide policy implications on strengthening human capital investments among the disadvantaged groups, reinforcing reforms that promote equality of opportunity, and improving the efficiency of labor markets in China.

Income inequality in today's China.

Using multiple data sources, we establish that China's income inequality since 2005 has reached very high levels, with the Gini coefficient in the range of 0.53-0.55. Analyzing comparable survey data collected in 2010 in China and the United States, we examine social determinants that help explain China's high income inequality. Our results indicate that a substantial part of China's high income inequality is due to regional disparities and the rural-urban gap. The contributions of these two structural forces are particularly strong in China, but they play a negligible role in generating the overall income inequality in the United States, where individual-level and family-level income determinants, such as family structure and race/ethnicity, play a much larger role.

Soaring Income Gaps: China in Comparative Perspective

Despite repeated pledges by China's leaders to reduce the gap between rich and poor, income inequality has continued to rise. China's Gini coefficient, a standard measure of income inequality, was higher in 2007 than in the United States, Russia, or most other societies. Why have China's income gaps increased so fast and so far, despite programs designed to promote greater equality? Standard explanations, such as income gaps inevitably rising with rapid economic development or in a post-socialist transition, cannot explain the Chinese case. Paradoxically, the sharp rise in inequality is driven more by the legacy of China's socialist system than by market forces or the global economy. It will not be possible to bring China's soaring income gaps under control unless the new leaders who took power in 2012–2013 are able to make much more fundamental reforms than have been attempted to date.