Rising Income Inequality in China : A Race to the Top

Income inequality in China has risen rapidly in the past decades across regions, between rural and urban sectors, and within provinces. The dynamics of divergence across these sub-national areas have taken the form of a "race to the top"...

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Main Authors: Luo, Xubei, Zhu, Nong
Format: Policy Research Working Paper
Language:English
Published: World Bank, Washington, DC 2012
Subjects:
Online Access:http://documents.worldbank.org/curated/en/2008/08/9794547/rising-income-inequality-china-race-top
http://hdl.handle.net/10986/6789
id okr-10986-6789
recordtype oai_dc
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
topic ABSOLUTE POVERTY
ABSOLUTE VALUE
ACCESS TO EDUCATION
ACCOUNTING
AGGREGATE INCOME
ALLOCATION OF RESOURCES
ANNUAL INCOME
AVERAGE ANNUAL
AVERAGE GROWTH
AVERAGE GROWTH RATE
AVERAGE INCOME
BALANCED GROWTH
BASIC EDUCATION
COMPARATIVE ADVANTAGE
CONSUMER
CONSUMER PRICE INDEX
CONTRIBUTION
CONTRIBUTIONS
COUNTRY REGRESSIONS
DECOMPOSITION ANALYSIS
DEMOGRAPHIC PRESSURE
DENSITY CURVE
DEPENDANT
DEVELOPING WORLD
DEVELOPMENT ECONOMICS
DEVELOPMENT EFFORTS
DEVELOPMENT REPORT
DISPARITY IN INCOME
DISTRIBUTIONAL CHANGES
DISTRIBUTIONAL EFFECT
DISTRIBUTIONAL EFFECTS
DIVERSIFICATION
ECONOMIC DEVELOPMENT
ECONOMIC EFFICIENCY
ECONOMIC GROWTH
ECONOMIC LITERATURE
ECONOMIC MANAGEMENT
ECONOMIC PROGRESS
ECONOMIC REFORM
ECONOMIC REFORMS
ECONOMIC REVIEW
ECONOMIC STUDIES
ECONOMIC TRANSITION
ECONOMICS LETTERS
EDUCATED PEOPLE
EDUCATION LEVEL
EMPIRICAL EVIDENCE
EMPIRICAL FINDINGS
EQUALITY OF OPPORTUNITY
EQUITABLE DISTRIBUTION
FARM ACTIVITIES
FARM ACTIVITY
FARMERS
FINANCIAL CONSTRAINTS
FISCAL CONSTRAINTS
FIXED EFFECTS
FOOD POLICY
FOOD SAFETY
FORMAL EDUCATION
FULL EMPLOYMENT
GINI COEFFICIENT
GINI INDEX
GOVERNMENT POLICIES
GRAIN PRODUCTION
GROWTH EFFECT
GROWTH ELASTICITY
GROWTH PERFORMANCE
HEALTH CARE
HOUSEHOLD DATA
HOUSEHOLD INCOME
HOUSEHOLD INCOMES
HOUSEHOLD LEVEL
HOUSEHOLD MEMBERS
HOUSEHOLD PER CAPITA INCOME
HOUSEHOLD SURVEY
HUMAN CAPITAL
HUMAN CAPITAL INVESTMENT
IMPACT OF EDUCATION
INCOME
INCOME CHANGE
INCOME DIFFERENTIALS
INCOME DISPARITY
INCOME DISTRIBUTION
INCOME DISTRIBUTIONS
INCOME EQUATION
INCOME GAINS
INCOME GAP
INCOME GROWTH
INCOME GROWTH RATE
INCOME INCREASE
INCOME INEQUALITY
INCOME LEVEL
INCOME LEVELS
INCOME POVERTY
INCOME SUPPORT
INCOMES
INCREASE IN INCOME
INDEPENDENT VARIABLES
INEQUALITY FALLS
INEQUALITY MEASURES
INEQUALITY TRENDS
INTERNAL MIGRATION
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
INTERNATIONAL PRICE
INTERNATIONAL PRICES
INVESTING
LABOR FORCE
LABOR MARKET
LABOR MARKETS
LAND REFORM
LEVEL OF EDUCATION
LIVING STANDARDS
LOCAL GOVERNMENTS
LOG-NORMAL DISTRIBUTION
LOGARITHMIC SCALE
LONG RUN
LOWER INCOME
MARGINAL RETURNS
MARKET ECONOMY
MEAN GROWTH
MEAN INCOME
MEAN INCOME GROWTH
MEAN VALUE
MEDIAN INCOME
MIDWIFE
MIGRATION
MODERNIZATION
NATIONAL LEVEL
NON-INCOME DIMENSIONS
NURSE
NUTRITION
OPEN ECONOMIES
OWNERSHIPS
PER CAPITA GROWTH
PER CAPITA GROWTH RATE
POLICY IMPLICATIONS
POLICY RESEARCH
POLICY RESEARCH WORKING PAPER
POLITICAL ECONOMY
POOR
POOR GROWTH
POOR HOUSEHOLDS
POOR PEOPLE
POPULATION CENTER
POVERTY ASSESSMENT
POVERTY DATA
POVERTY HEADCOUNT
POVERTY INCIDENCE
POVERTY INDEX
POVERTY LINE
POVERTY LINES
POVERTY MEASURES
POVERTY REDUCTION
POVERTY-GROWTH-INEQUALITY TRIANGLE
POWER PARITY
PRO-POOR
PRO-POOR GROWTH
PRODUCTIVITY
PROGRESS
PROPERTY RIGHTS
PROPORTIONAL CHANGE
PROSPERITY
PUBLIC ENTERPRISES
PUBLIC INVESTMENTS
REAL INCOME
REDUCING POVERTY
REGIONAL DISPARITIES
REGIONAL INEQUALITIES
REGIONAL INEQUALITY
REGIONAL POLICY
REGRESSION RESULTS
RELATIVE IMPORTANCE
RELATIVE INCOME
RELATIVE INCOMES
REMITTANCE
RESOURCE CONSTRAINTS
RESPONSIBILITIES
RETIRED
RETIREMENT
RETIREMENT AGE
RETIREMENT PENSION
RISING INCOME INEQUALITY
RISING INEQUALITY
RURAL
RURAL AREA
RURAL AREAS
RURAL HOUSEHOLD
RURAL HOUSEHOLD INCOME
RURAL HOUSEHOLDS
RURAL INCOME
RURAL INEQUALITY
RURAL LABOR
RURAL POVERTY
RURAL POVERTY RATE
SEGMENTS OF SOCIETY
SENIOR
SIGNIFICANT IMPACT
SKILL LEVEL
SKILLED LABOR
SKILLED WORKER
STOCKS
SUSTAINABLE GROWTH
TYPE OF WORK
UNEMPLOYED
UNEMPLOYMENT
UNEQUAL DISTRIBUTION
URBAN AREAS
URBAN CENTERS
URBAN POPULATION
URBAN POVERTY
URBAN UNEMPLOYMENT
URBAN WORKERS
URBANIZATION
WAGE
WAGE DIFFERENTIALS
WAGE GROWTH
WAGE LEVEL
WAGES
WHITE-COLLAR WORKERS
spellingShingle ABSOLUTE POVERTY
ABSOLUTE VALUE
ACCESS TO EDUCATION
ACCOUNTING
AGGREGATE INCOME
ALLOCATION OF RESOURCES
ANNUAL INCOME
AVERAGE ANNUAL
AVERAGE GROWTH
AVERAGE GROWTH RATE
AVERAGE INCOME
BALANCED GROWTH
BASIC EDUCATION
COMPARATIVE ADVANTAGE
CONSUMER
CONSUMER PRICE INDEX
CONTRIBUTION
CONTRIBUTIONS
COUNTRY REGRESSIONS
DECOMPOSITION ANALYSIS
DEMOGRAPHIC PRESSURE
DENSITY CURVE
DEPENDANT
DEVELOPING WORLD
DEVELOPMENT ECONOMICS
DEVELOPMENT EFFORTS
DEVELOPMENT REPORT
DISPARITY IN INCOME
DISTRIBUTIONAL CHANGES
DISTRIBUTIONAL EFFECT
DISTRIBUTIONAL EFFECTS
DIVERSIFICATION
ECONOMIC DEVELOPMENT
ECONOMIC EFFICIENCY
ECONOMIC GROWTH
ECONOMIC LITERATURE
ECONOMIC MANAGEMENT
ECONOMIC PROGRESS
ECONOMIC REFORM
ECONOMIC REFORMS
ECONOMIC REVIEW
ECONOMIC STUDIES
ECONOMIC TRANSITION
ECONOMICS LETTERS
EDUCATED PEOPLE
EDUCATION LEVEL
EMPIRICAL EVIDENCE
EMPIRICAL FINDINGS
EQUALITY OF OPPORTUNITY
EQUITABLE DISTRIBUTION
FARM ACTIVITIES
FARM ACTIVITY
FARMERS
FINANCIAL CONSTRAINTS
FISCAL CONSTRAINTS
FIXED EFFECTS
FOOD POLICY
FOOD SAFETY
FORMAL EDUCATION
FULL EMPLOYMENT
GINI COEFFICIENT
GINI INDEX
GOVERNMENT POLICIES
GRAIN PRODUCTION
GROWTH EFFECT
GROWTH ELASTICITY
GROWTH PERFORMANCE
HEALTH CARE
HOUSEHOLD DATA
HOUSEHOLD INCOME
HOUSEHOLD INCOMES
HOUSEHOLD LEVEL
HOUSEHOLD MEMBERS
HOUSEHOLD PER CAPITA INCOME
HOUSEHOLD SURVEY
HUMAN CAPITAL
HUMAN CAPITAL INVESTMENT
IMPACT OF EDUCATION
INCOME
INCOME CHANGE
INCOME DIFFERENTIALS
INCOME DISPARITY
INCOME DISTRIBUTION
INCOME DISTRIBUTIONS
INCOME EQUATION
INCOME GAINS
INCOME GAP
INCOME GROWTH
INCOME GROWTH RATE
INCOME INCREASE
INCOME INEQUALITY
INCOME LEVEL
INCOME LEVELS
INCOME POVERTY
INCOME SUPPORT
INCOMES
INCREASE IN INCOME
INDEPENDENT VARIABLES
INEQUALITY FALLS
INEQUALITY MEASURES
INEQUALITY TRENDS
INTERNAL MIGRATION
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
INTERNATIONAL PRICE
INTERNATIONAL PRICES
INVESTING
LABOR FORCE
LABOR MARKET
LABOR MARKETS
LAND REFORM
LEVEL OF EDUCATION
LIVING STANDARDS
LOCAL GOVERNMENTS
LOG-NORMAL DISTRIBUTION
LOGARITHMIC SCALE
LONG RUN
LOWER INCOME
MARGINAL RETURNS
MARKET ECONOMY
MEAN GROWTH
MEAN INCOME
MEAN INCOME GROWTH
MEAN VALUE
MEDIAN INCOME
MIDWIFE
MIGRATION
MODERNIZATION
NATIONAL LEVEL
NON-INCOME DIMENSIONS
NURSE
NUTRITION
OPEN ECONOMIES
OWNERSHIPS
PER CAPITA GROWTH
PER CAPITA GROWTH RATE
POLICY IMPLICATIONS
POLICY RESEARCH
POLICY RESEARCH WORKING PAPER
POLITICAL ECONOMY
POOR
POOR GROWTH
POOR HOUSEHOLDS
POOR PEOPLE
POPULATION CENTER
POVERTY ASSESSMENT
POVERTY DATA
POVERTY HEADCOUNT
POVERTY INCIDENCE
POVERTY INDEX
POVERTY LINE
POVERTY LINES
POVERTY MEASURES
POVERTY REDUCTION
POVERTY-GROWTH-INEQUALITY TRIANGLE
POWER PARITY
PRO-POOR
PRO-POOR GROWTH
PRODUCTIVITY
PROGRESS
PROPERTY RIGHTS
PROPORTIONAL CHANGE
PROSPERITY
PUBLIC ENTERPRISES
PUBLIC INVESTMENTS
REAL INCOME
REDUCING POVERTY
REGIONAL DISPARITIES
REGIONAL INEQUALITIES
REGIONAL INEQUALITY
REGIONAL POLICY
REGRESSION RESULTS
RELATIVE IMPORTANCE
RELATIVE INCOME
RELATIVE INCOMES
REMITTANCE
RESOURCE CONSTRAINTS
RESPONSIBILITIES
RETIRED
RETIREMENT
RETIREMENT AGE
RETIREMENT PENSION
RISING INCOME INEQUALITY
RISING INEQUALITY
RURAL
RURAL AREA
RURAL AREAS
RURAL HOUSEHOLD
RURAL HOUSEHOLD INCOME
RURAL HOUSEHOLDS
RURAL INCOME
RURAL INEQUALITY
RURAL LABOR
RURAL POVERTY
RURAL POVERTY RATE
SEGMENTS OF SOCIETY
SENIOR
SIGNIFICANT IMPACT
SKILL LEVEL
SKILLED LABOR
SKILLED WORKER
STOCKS
SUSTAINABLE GROWTH
TYPE OF WORK
UNEMPLOYED
UNEMPLOYMENT
UNEQUAL DISTRIBUTION
URBAN AREAS
URBAN CENTERS
URBAN POPULATION
URBAN POVERTY
URBAN UNEMPLOYMENT
URBAN WORKERS
URBANIZATION
WAGE
WAGE DIFFERENTIALS
WAGE GROWTH
WAGE LEVEL
WAGES
WHITE-COLLAR WORKERS
Luo, Xubei
Zhu, Nong
Rising Income Inequality in China : A Race to the Top
geographic_facet East Asia and Pacific
China
relation Policy Research Working Paper No. 4700
description Income inequality in China has risen rapidly in the past decades across regions, between rural and urban sectors, and within provinces. The dynamics of divergence across these sub-national areas have taken the form of a "race to the top" - meaning that all segments of the population, including the poor with low education in lagging inland rural areas, have experienced gains in average income. The largest gains have been registered by those with higher income and education in leading coastal urban areas. Using the China Economic, Population, Nutrition and Health Survey data of 1989 and 2004, we show that the most important factors explaining overall inequality are differential returns to schooling and sector of employment. A decomposition analysis based on household income determination shows that the increase in returns to education explains two-thirds of income changes in urban areas and one-sixth in rural areas. The widening income gaps are the consequence of higher growth in leading urban and coastal areas and that the skilled population has benefited more from the economic reforms carried out during the last 25 years. The authors argue that rising income inequality can be part of a normal process of development at a certain stage, and that the dynamics of spatial income divergence in the form of "a race to the top" can be desirable to some extent as it unleashes competitive pressure and creates incentives for investment in skills. Continuing to improve market efficiency and investing in people, in particular improving education service in lagging areas to poor people, are important for sustainable growth and equitable distribution in the long run.
format Publications & Research :: Policy Research Working Paper
author Luo, Xubei
Zhu, Nong
author_facet Luo, Xubei
Zhu, Nong
author_sort Luo, Xubei
title Rising Income Inequality in China : A Race to the Top
title_short Rising Income Inequality in China : A Race to the Top
title_full Rising Income Inequality in China : A Race to the Top
title_fullStr Rising Income Inequality in China : A Race to the Top
title_full_unstemmed Rising Income Inequality in China : A Race to the Top
title_sort rising income inequality in china : a race to the top
publisher World Bank, Washington, DC
publishDate 2012
url http://documents.worldbank.org/curated/en/2008/08/9794547/rising-income-inequality-china-race-top
http://hdl.handle.net/10986/6789
_version_ 1764401082738409472
spelling okr-10986-67892021-04-23T14:02:32Z Rising Income Inequality in China : A Race to the Top Luo, Xubei Zhu, Nong ABSOLUTE POVERTY ABSOLUTE VALUE ACCESS TO EDUCATION ACCOUNTING AGGREGATE INCOME ALLOCATION OF RESOURCES ANNUAL INCOME AVERAGE ANNUAL AVERAGE GROWTH AVERAGE GROWTH RATE AVERAGE INCOME BALANCED GROWTH BASIC EDUCATION COMPARATIVE ADVANTAGE CONSUMER CONSUMER PRICE INDEX CONTRIBUTION CONTRIBUTIONS COUNTRY REGRESSIONS DECOMPOSITION ANALYSIS DEMOGRAPHIC PRESSURE DENSITY CURVE DEPENDANT DEVELOPING WORLD DEVELOPMENT ECONOMICS DEVELOPMENT EFFORTS DEVELOPMENT REPORT DISPARITY IN INCOME DISTRIBUTIONAL CHANGES DISTRIBUTIONAL EFFECT DISTRIBUTIONAL EFFECTS DIVERSIFICATION ECONOMIC DEVELOPMENT ECONOMIC EFFICIENCY ECONOMIC GROWTH ECONOMIC LITERATURE ECONOMIC MANAGEMENT ECONOMIC PROGRESS ECONOMIC REFORM ECONOMIC REFORMS ECONOMIC REVIEW ECONOMIC STUDIES ECONOMIC TRANSITION ECONOMICS LETTERS EDUCATED PEOPLE EDUCATION LEVEL EMPIRICAL EVIDENCE EMPIRICAL FINDINGS EQUALITY OF OPPORTUNITY EQUITABLE DISTRIBUTION FARM ACTIVITIES FARM ACTIVITY FARMERS FINANCIAL CONSTRAINTS FISCAL CONSTRAINTS FIXED EFFECTS FOOD POLICY FOOD SAFETY FORMAL EDUCATION FULL EMPLOYMENT GINI COEFFICIENT GINI INDEX GOVERNMENT POLICIES GRAIN PRODUCTION GROWTH EFFECT GROWTH ELASTICITY GROWTH PERFORMANCE HEALTH CARE HOUSEHOLD DATA HOUSEHOLD INCOME HOUSEHOLD INCOMES HOUSEHOLD LEVEL HOUSEHOLD MEMBERS HOUSEHOLD PER CAPITA INCOME HOUSEHOLD SURVEY HUMAN CAPITAL HUMAN CAPITAL INVESTMENT IMPACT OF EDUCATION INCOME INCOME CHANGE INCOME DIFFERENTIALS INCOME DISPARITY INCOME DISTRIBUTION INCOME DISTRIBUTIONS INCOME EQUATION INCOME GAINS INCOME GAP INCOME GROWTH INCOME GROWTH RATE INCOME INCREASE INCOME INEQUALITY INCOME LEVEL INCOME LEVELS INCOME POVERTY INCOME SUPPORT INCOMES INCREASE IN INCOME INDEPENDENT VARIABLES INEQUALITY FALLS INEQUALITY MEASURES INEQUALITY TRENDS INTERNAL MIGRATION INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE INTERNATIONAL PRICE INTERNATIONAL PRICES INVESTING LABOR FORCE LABOR MARKET LABOR MARKETS LAND REFORM LEVEL OF EDUCATION LIVING STANDARDS LOCAL GOVERNMENTS LOG-NORMAL DISTRIBUTION LOGARITHMIC SCALE LONG RUN LOWER INCOME MARGINAL RETURNS MARKET ECONOMY MEAN GROWTH MEAN INCOME MEAN INCOME GROWTH MEAN VALUE MEDIAN INCOME MIDWIFE MIGRATION MODERNIZATION NATIONAL LEVEL NON-INCOME DIMENSIONS NURSE NUTRITION OPEN ECONOMIES OWNERSHIPS PER CAPITA GROWTH PER CAPITA GROWTH RATE POLICY IMPLICATIONS POLICY RESEARCH POLICY RESEARCH WORKING PAPER POLITICAL ECONOMY POOR POOR GROWTH POOR HOUSEHOLDS POOR PEOPLE POPULATION CENTER POVERTY ASSESSMENT POVERTY DATA POVERTY HEADCOUNT POVERTY INCIDENCE POVERTY INDEX POVERTY LINE POVERTY LINES POVERTY MEASURES POVERTY REDUCTION POVERTY-GROWTH-INEQUALITY TRIANGLE POWER PARITY PRO-POOR PRO-POOR GROWTH PRODUCTIVITY PROGRESS PROPERTY RIGHTS PROPORTIONAL CHANGE PROSPERITY PUBLIC ENTERPRISES PUBLIC INVESTMENTS REAL INCOME REDUCING POVERTY REGIONAL DISPARITIES REGIONAL INEQUALITIES REGIONAL INEQUALITY REGIONAL POLICY REGRESSION RESULTS RELATIVE IMPORTANCE RELATIVE INCOME RELATIVE INCOMES REMITTANCE RESOURCE CONSTRAINTS RESPONSIBILITIES RETIRED RETIREMENT RETIREMENT AGE RETIREMENT PENSION RISING INCOME INEQUALITY RISING INEQUALITY RURAL RURAL AREA RURAL AREAS RURAL HOUSEHOLD RURAL HOUSEHOLD INCOME RURAL HOUSEHOLDS RURAL INCOME RURAL INEQUALITY RURAL LABOR RURAL POVERTY RURAL POVERTY RATE SEGMENTS OF SOCIETY SENIOR SIGNIFICANT IMPACT SKILL LEVEL SKILLED LABOR SKILLED WORKER STOCKS SUSTAINABLE GROWTH TYPE OF WORK UNEMPLOYED UNEMPLOYMENT UNEQUAL DISTRIBUTION URBAN AREAS URBAN CENTERS URBAN POPULATION URBAN POVERTY URBAN UNEMPLOYMENT URBAN WORKERS URBANIZATION WAGE WAGE DIFFERENTIALS WAGE GROWTH WAGE LEVEL WAGES WHITE-COLLAR WORKERS Income inequality in China has risen rapidly in the past decades across regions, between rural and urban sectors, and within provinces. The dynamics of divergence across these sub-national areas have taken the form of a "race to the top" - meaning that all segments of the population, including the poor with low education in lagging inland rural areas, have experienced gains in average income. The largest gains have been registered by those with higher income and education in leading coastal urban areas. Using the China Economic, Population, Nutrition and Health Survey data of 1989 and 2004, we show that the most important factors explaining overall inequality are differential returns to schooling and sector of employment. A decomposition analysis based on household income determination shows that the increase in returns to education explains two-thirds of income changes in urban areas and one-sixth in rural areas. The widening income gaps are the consequence of higher growth in leading urban and coastal areas and that the skilled population has benefited more from the economic reforms carried out during the last 25 years. The authors argue that rising income inequality can be part of a normal process of development at a certain stage, and that the dynamics of spatial income divergence in the form of "a race to the top" can be desirable to some extent as it unleashes competitive pressure and creates incentives for investment in skills. Continuing to improve market efficiency and investing in people, in particular improving education service in lagging areas to poor people, are important for sustainable growth and equitable distribution in the long run. 2012-05-31T19:53:10Z 2012-05-31T19:53:10Z 2008-08 http://documents.worldbank.org/curated/en/2008/08/9794547/rising-income-inequality-china-race-top http://hdl.handle.net/10986/6789 English Policy Research Working Paper No. 4700 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research East Asia and Pacific China