Income Inequality In China Research Articles

Investigating the main factors responsible for changes in income inequality in China between 2000 and 2018

Poverty, and especially the widening disparity between the rich and the poor, leads to social unrest that can interrupt the harmonious development of human society. Understanding the reasons for income inequality, and supporting the development of an effective strategy to reduce this inequality, have been major goals in socioeconomic research around the world. To identify the determinants of the income gap, we calculated the Gini coefficients for Chinese provinces and performed regression analysis and contribution analysis for heterogeneity, using data from 30 Chinese provinces from 2002 to 2018. We found that urbanization, higher education, and foreign direct investment in eastern China and energy in central and western China were important factors that increased the Gini coefficient (i.e., decreased equality). Therefore, paying more attention to the fair distribution of the factors that can increase the Gini coefficient and investing more in the factors that can reduce the Gini coefficient will be the keys to narrowing the income gap. Our approach revealed factors that should be targeted for solutions both in China and in other developing countries that are facing similar difficulties, although the details will vary among countries and contexts.

The Misestimation of Urban‒Rural Income Inequality in China

The Misestimation of Urban‒Rural Income Inequality in China

How the Level of Education Affects Income Inequality in China

The issue of education and income inequality is receiving increasing attention worldwide. This paper mainly focuses on the relationship between the level of education and income inequality. This paper provides a literature review and then delves into the social situation, societal phenomenon, and government policies in the Chinese context. It concludes that there is a close connection between education and income inequality. By comprehensively analyzing the correlation between education and income inequality in China, this paper reveals the relationship between the two by sorting out the effect of various factors within a given context. It offers implications for government to address and alleviate disparities in the country's socio-economic situation.

Causes and Consequences of Minimum Wage Variation in China

This paper examines the effects of minimum wage policies on employment and income inequality in China. It is focusing on the interplay with foreign direct investment (FDI) and regional economic disparities. Since 1978, China’s economic reforms have led to significant growth and rising wages. Yet exacerbated income inequality. The study finds that FDI raises wages. It is particularly for skilled labor, while regional variations in minimum wage standards reflect economic activity differences between coastal and inland provinces. Higher minimum wages have mixed employment effects. It is negatively impacting prosperous Eastern regions while benefiting Central and Western regions. Additionally, higher wages spur productivity improvements and innovation among firms. Policy recommendations include developing region-specific wage policies. It enhances protections for migrant workers, encouraging investment in productivity-enhancing technologies. It promotes balanced economic development and strengthens labor regulation enforcement. These measures aim to balance wage growth with employment stability. Hence, this analysis promotes equitable economic development across China.

Economic Communication: The Influence of High-Speed Rail on Urban-Rural Income Inequality in China

Economic Communication: The Influence of High-Speed Rail on Urban-Rural Income Inequality in China

Economic growth and income inequality

In recent years the problem of economic inequalities has become one of the most often discussed problems in economics. Even though from neoclassical perspective inequalities should not have negative impact on economy, still the relation between inequalities and economic growth is not obvious. Traditionally, the starting point in this discussion is Simon Kuznets concept, according to which inequality rises in the early phases of economic development and decreases as the growth takes place. The empirical verification of this concept has been investigated, but the evidence is ambiguous. In this context, re-examining Kuznets theory for socialist countries in Asian (i.e. China, Vietnam and Lao) is especially interesting because of the rapid economic growth yet still keeping authoritarian regime. Therefore the main aim of the study is to verify the relation between economic growth and income inequality in China, Lao and Vietnam in years 1990–2022 and assess whether the relation takes shape of so-called Kuznets curve. In order to achieve the goal the data analysis and basic econometric methods are used. The results generally support relations indicated by Kuznets except for Lao for which obtained result were not statistically significant. The findings keep the door open to further analyses aimed at the identification and exploration of more significant determinants that could conclusively verify the relation between inequalities and economic development. Most promising would be incorporating some institutional determinants as it was proposed in Acemoglu and Robinson works.

Minimum wage and income inequality among the migrant population in China

ABSTRACT Have frequently adjusted minimum wages slowed the widening of income inequality in China? To answer this question, this study examines the impact of minimum wages on income inequality among the migrant population using data from the China Migrants Dynamics Survey (CMDS) for 2011–2018 and data on city-level minimum wages over the same period. The research findings indicate that the minimum wage significantly reduces income inequality within China’s migrant population. Importantly, the conclusion remains robust after employing rigorous analytical methods, such as instrumental variable analysis, replacement of the explained variable, and provincial-level data regression analysis. Moreover, the mechanism analysis reveals that the minimum wage contributes to reducing income inequality within the migrant population by raising the income of low-income groups without causing unemployment. The extent of this impact is closely related to the implementation of regional minimum wage policies. Additionally, the heterogeneity results show that minimum wage has a more pronounced effect on reducing income inequality among formally employed individuals and those working in the state-owned sector than in the informal employment and non-state-owned sectors. Overall, these findings provide valuable insights for policymakers to further optimize the minimum wage system in China to promote common prosperity.

Deciphering the digital divide: the heterogeneous and nonlinear influence of digital economy on urban-rural income inequality in China

ABSTRACT This study investigates the heterogeneous and nonlinear impact of digital economy on the urban-rural income disparities in 30 Chinese provinces from 2013 to 2020. The results from moderated multiple regressions and panel threshold regressions consistently indicate that digital economy generally widens China’s urban-rural inequality, but this widening effect diminishes as the digital economy progresses. Furthermore, the influence of digital economy varies depending on local socio-economic factors, including economic development, industrial structure, education level, government expenditure, and openness. Digital economy exerts a stronger influence on exacerbating the inequality in economically developed regions with higher education levels and greater openness, but it helps prevent the inequality from expanding through its interactions with secondary industry development and fiscal expenditure. These findings provide a reference for formulating target strategies in line with local development conditions to bridge the inequality engendered by the digital divide.

Does haze-related sentiment affect income inequality in China?

We investigate the effect of haze-related sentiment on urban–rural income inequality of prefecture-level cities in China. Income inequality is captured by the Theil index, the ratio and the difference between urban–rural income. We use GPT-3.5 models to conduct the sentiment analysis on the haze-related posts retrieved from the Weibo platform from 2018 to 2021. The generated emotion score and the number of posts are used to construct the haze-related sentiment measure. We find that haze-related unhappiness exacerbates urban–rural income inequality. The net population flow is investigated as the mechanism, indicating that negative sentiment reduces the net flows of both the floating population and resident population and consequently increases income inequality. The heterogeneity analysis finds that the effects of haze-related unhappiness on income inequality are smaller in cities with more hospital beds, doctors, and green spaces. Furthermore, the effects of the sentiment measure on income inequality vary significantly across cities in different geographic locations.

Effect of Entrepreneurship on Urban-Rural Income Inequality in China

ABSTRACT Entrepreneurship is a two-edged sword, promoting economic mobility for some but potentially leading others into poverty. This research explores the effect of entrepreneurship on urban-rural income disparity in China, utilizing data collected in 265 Chinese cities from 2013 to 2019. Using a two-step System Generalized Method of Moments (GMM) for dynamic panel data, we found that entrepreneurship consistently reduces income inequality across various income levels in different digitalization environments. The findings underscore the significance of entrepreneurship in narrowing the disparity in income between urban and rural areas. Policies would be adaptable to the challenges and opportunities in different locations, with the goal of creating a favorable climate for the growth of both urban and rural economies.

Bridging the gap: the effect of rural e-commerce development on internal income inequality in China

ABSTRACT The burgeoning sphere of rural e-commerce has garnered considerable acclaim for its digital economy dividends, yet the literature presents a gap in evaluating its repercussions on household internal income inequality. Regarding the Rural E-commerce Demonstration County (REDC) program implemented in batches as a quasi-natural experiment, we employ the staggered difference-in-differences (SDID) method to explore causal relationships between rural e-commerce development and internal income inequality. Results show that rural e-commerce development significantly reduces internal income inequality in China. Using the Bacon decomposition method and exclusion of potential spillover effects, we confirm the reliability of our SDID estimates. We find that this positive effect is explained by non-farm employment and entrepreneurial activities, information advantages, and infrastructure development. Furthermore, we reveal the inclusive characteristics of rural e-commerce development but are influenced by the potential digital divide. Our study enriches the research field on the benefits of e-commerce from a new perspective of alleviating income inequality and offers pragmatic insights for harnessing e-commerce tools as vehicles for attenuating income disparity and fostering social equity in developing countries.

The causes of income inequality in urban China: A household assets perspective

Despite income inequality in China being a heated topic in scholarship and public discussion, little research has explored the trend in income inequality since the mid-2010s or focused on the implications of household assets on income inequality. Using pooled cross-sectional data from the Chinese General Social Survey, we estimate income inequality at the household level from 2012 to 2021 and further examine the effects of two types of household assets (housing assets (HA) and financial assets (FA)) on income inequality in urban China, as well as the moderating effects of socioeconomic status (SES) and regional marketization. The results indicate that national income inequality was sustained at a high level between 2012 and 2021, while income inequality in urban households was higher than that in rural households. Both HA and FA were positively related to income inequality, and the latter assets had a stronger effect on income inequality. The association between the two types of household assets and income inequality strengthened along with an increase in family SES and regional marketization levels. The study highlights that FA, relative to HA, are a more important contributor to income inequality among urban households, thus extending the literature on inequality and social stratification in contemporary China by revealing the causes underlying rising income inequality from the household assets perspective.

Impact of Covid-19 on Income Inequality; a Comparative Analysis for China and Italy

This study examines the impact of covid 19 on income inequality and comparison between China and Italy. Trends in Gini coefficient showed differentiated results for two countries. In this comparison various indicators came to consideration that affected inequality. For empirical investigation from the past data collected from World Development Indicators and Generalized methods of moments (GMM) for panel data analysis. Results indicated that poverty and unemployment have significant positive impact on income inequality while rate of taxes shown negative and significant impact on income inequality. These results supported many other studies but the post covid trend in Gini coefficient shows contradictory results. Rising trend in income inequality in China and falling trend in Italy drives the attention in mitigation policies. China preferred to save its population from corona virus and implemented strict stay at home and isolation policy. In this regard inequality showed rising trend. Whereas Italian government along with isolation and stay at home policies financed poor much and paid less attention to rich. In this way the gap between rich and poor came down. This study pays attention to the country-based policies reflecting government preferences and initiatives taken for betterment.

Green finance and high-pollution corporate compensation - Empirical evidence from green credit guidelines

With the increasing focus on Environmental, Social, and Governance (ESG) and Corporate Social Responsibility (CSR) on a global scale, stakeholders expect businesses to transform and enhance social responsibility. Over time, ESG and CSR have developed into vital performance metrics for businesses. Businesses are actively putting improvement measures into place in response to this new paradigm in order to stay competitive in this changing environment. China's dual commitment to CSR and sustainable development is in line with wider objectives, such as resolving issues of pay inequality. In 2012, the China Banking Regulatory Commission (CBRC) unveiled the “Green Credit Guidelines” (GCG), which take corporate governance's environmental considerations into account. These regulations set standards and specifically target high-pollution corporations. Companies may need to restructure their corporate structures and create efficient governance mechanisms in order to comply with these regulations and reduce carbon emissions. This will have an impact on the compensation packages of executives and regular employees.The most important question is how the “GCG” will affect the wage disparity in highly polluting companies. This study examines the 2012 “GCG” and its potential to reduce internal wage disparities, viewing it as a critical element of green financial policy. The paper uses data from Chinese A-share listed companies from 2007 to 2020. Besides, it uses the Difference-in-Differences method to assess the impact of China's GCG, treating its implementation as a quasi-natural experiment and controlling for concurrent policy effects to precisely identify its net impact on corporate carbon emissions and internal wage disparities.The findings show that “GCG” considerably closed internal wage disparities. Furthermore, the “GCG” has a path of guidance, incentives, and punishments that reduce internal wage disparities and promote a more equitable wage distribution within businesses. According to heterogeneity analysis, policies have a greater impact on the wage gap in businesses that are highly dependent on outside funding and have political connection. In order to achieve a compensation balance and meet the objectives of social responsibility and corporate sustainable development, the government should strengthen the complementary effects of green financial policies.The compensation balance in highly polluting companies has important theoretical and practical ramifications. On the one hand, it represents the convergence of income equality, corporate governance, and environmental responsibility. It helps to expand knowledge of sustainable development, fair compensation, and environmental policies. On the other hand, the widening pay disparity between executives and average employees reflects the exacerbation of income inequality in China, which could potentially impact companies' long-term development. Conversely, a well-balanced pay plan can improve worker productivity and motivation while empowering stakeholders to make wise investment choices.

Income inequality effect of government investment behavior: Comparisons based on different investment areas, different regions and different groups in China

The research focuses on and analyses the effect of government investment on income distribution by evaluating the effects of public spending on income variation in various fields, in various regions, and at different income levels in the Chinese economy. The study found that government investment in different fields substantially decreases income inequality. Increasing housing security, medical, agriculture, forestry and other expenditures has a significant impact on improving the income inequality between rural and urban inhabitants; the impact of government investment in the western, central, and eastern regions on the reduction of income variation is decreasing successively, with emphasis on government investment in the western and central regions. The effects of government investment on the decline of the income distribution are twofold: first, it influences the amount of low- and middle-income groups; second, it has an impact on the reduction of high-income organizations; however, the impact on the income equality of high-income and low-income organizations is not considerable. In investment, the study demonstrates that income inequality can be reduced without negatively affecting the financial status of higher-income individuals. It is significant to value providing adequate housing security for low-income populations as a critical policy implication. This study, utilizing novel indicators, contributes to the current body of research on the impact of fiscal policy in addressing income inequality in China.

Income inequality among peers in China: Does internet penetration have a role?

AbstractIn the Internet age, income inequality within peer groups has raised attention. We examine the effect of Internet penetration on peer income inequality and investigate whether the Internet penetration and peer income inequality relationship can be reinforced by human capital. Using a combination of macro and microdatabases of China over the period 2010–2018, we find that peer income inequality in China generally follows a downward trend from 2010. In addition, we show that Internet penetration significantly reduces peer income inequality. Internet penetration has a negative effect on peer income inequality among those under 40 years old, while the effect is reversed among those aged 40–60. Furthermore, human capital can reinforce the links between Internet penetration and peer income inequality. Our results confirm that a mixed indicator of Internet penetration and human capital investment should be part of an active economic policy aimed at reducing peer income inequality.

Correction to “Accounting for changes in income inequality in China, 2002–2018: Evidence from household survey data”

Correction to “Accounting for changes in income inequality in China, 2002–2018: Evidence from household survey data”

Digital technology, e-commerce, and economic inequality: The case of China

This paper examines economic inequality through digital facilitated e-commerce as a new perspective. Digital development is good for output production, which can attenuate regional income inequality in China. Falling search costs with e-commerce technological progress boost more online search for better price discounts. The resulting increase in spending propensities is higher in remoter, poorer, or smaller regions, so that consumption inequality declines more than income inequality as recently observed in China. This theoretical result is consistent with our empirical finding that China's ratio of income to consumption inequality rises significantly with rapid developments in its e-commerce. Additionally, this ratio is found to decrease under wider economic openness but increase with improved transportation conditions.

Study on Urban-Rural Income Inequality in China—Based on VAR Model

Wealth disparity is a complex issue that has plagued the world for many years. China’s economic development has achieved world-renowned results during the last 40 years. Over that time, the country has risen from extreme poverty to the world’s second-largest economy. Nevertheless, the significant wealth inequality accompanying it has also caused great concern. At the start of China’s reform and opening-up period, government officials tacitly approved of this uneven development and made plans to “drive the rich first to the rich later” in pursuit of economic development. Economic development aims to achieve shared prosperity, not to deprive the relatively poor of wealth. As a result, wealth disparity in China must be addressed. Based on the Kuznets hypothesis, the theory of urban-rural dual structure, and the current situation in China, this paper has evaluated the current wealth gap in China. Since 1978, Chinese households’ wealth accumulation has come from the income gap. Private property was not allowed to exist during China’s planned economy period (1949-1977). After the reform and opening up period (After 1978), income disparities between various industrial sectors led to an initial round of wealth accumulation for many Chinese citizens. The industrialisation process and urbanisation rate significantly impacted China’s economic modernisation and growth. Therefore, this paper has analysed the effects of several factors on income disparity in China. The examined factors were; economic development, the urbanisation rate, and the industrialisation process. Based on the theoretical analysis, this paper selected time series data from 1978 to 2021, including; per capita GDP, the per capita disposable income of urban and rural residents, the urban population to total population ratio, and industry contribution to the GDP. First, an analysis of the impact of economic development on income inequality was conducted using a static model. Then, a VAR model was built through ADF and PP testing, and an impulse response and variance analysis were conducted to explain the impact of various factors on the change rate of income inequality. The study results indicated that (1) Economic development has resulted in a significant increase in the income of urban and rural residents. However, urban residents have benefited more. Simultaneously, the income gap between urban and rural areas has grown significantly alongside economic expansion. (2) Urbanisation showed little effect on the income gap in the short term; however, it increased it in the long term. (3) Industrialisation reduced the short- and long-term income gap while increasing urbanisation.

Influential Determinants of Income Disparity in China: An Examination Using Panel Data

Over the past few decades, the world has witnessed the economic miracle that China has achieved, but it is also worried about its rapidly increasing level of income inequality. This paper uses a panel data regression model to assess to what extent urbanization, Foreign Direct Investment (FDI), inflation, and education affect income inequality in China, using data from 25 Chinese provinces from 1995-2010. This study demonstrates that in China, the link between income inequality and urbanization aligns with the Kuznets inverted-U curve hypothesis. Meanwhile, FDI and education correlate positively with income inequality, while inflation and income inequality correlate negatively. The finding of this study argues that the policymaker in China should moderate urbanization to a certain extent, direct FDI flows to sectors that better benefit society as a whole, limit the rich's access to additional educational resources through their wealth, and use moderate expansionary monetary policy, thereby reducing income inequality while ensuring sustained economic growth.