Inequality and Poverty in China During Reform

Poverty and Economic Policy Research Network Working Paper No. PMMA-2007-07

46 Pages Posted: 12 Jun 2009

See all articles by Dwayne Benjamin

Dwayne Benjamin

University of Toronto

Loren Brandt

University of Toronto - Department of Economics; IZA Institute of Labor Economics

John Giles

North Carolina State University - Department of Accounting

Sangui Wang

Chinese Academy of Social Sciences (CASS) - Institute of Agricultural Economics

Date Written: March 15, 2007

Abstract

This paper provides an overview of the evolution of income inequality and poverty in China from 1987 to 2002, documenting significant increases of inequality within China’s urban and rural populations. In rural areas, increased inequality is primarily related to the disequalizing role of non-agricultural self-employment income and the slow growth in agricultural income from the mid-1990s onward. Poverty persists, and tied in part to slow growth in agricultural commodity prices. In urban areas, the declining role of subsidies and entitlements, the increase in wage inequality, and the layoffs during restructuring have fueled the growth in inequality within urban areas. Poverty levels, however, are very low. China should give more emphasis on education, training, and other human development efforts in its poverty reduction strategy since return to education increased rapidly and became a major source of inequality. A nationwide "social safety net" and an effective redistributive taxation system should be adopted and implemented to ensure that the poor can benefit from the fruits of rapid economic growth.

Keywords: Income Inequality, Poverty, Welfare, Growth, Reform, Transition, Policy, China

JEL Classification: D31, D63, I32, O18, O53

Suggested Citation

Benjamin, Dwayne and Brandt, Loren and Giles, John and Wang, Sangui, Inequality and Poverty in China During Reform (March 15, 2007). Poverty and Economic Policy Research Network Working Paper No. PMMA-2007-07, Available at SSRN: https://ssrn.com/abstract=1416963 or http://dx.doi.org/10.2139/ssrn.1416963

Dwayne Benjamin (Contact Author)

University of Toronto ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada
416-978-6130 (Phone)
416-978-6713 (Fax)

Loren Brandt

University of Toronto - Department of Economics ( email )

150 St. George Street
Toronto, Ontario M5S 3G7
Canada
416-978-4442 (Phone)
416-978-6713 (Fax)

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

John Giles

North Carolina State University - Department of Accounting ( email )

Raleigh, NC 27695-8113
United States

Sangui Wang

Chinese Academy of Social Sciences (CASS) - Institute of Agricultural Economics ( email )

No. 30 Baishi QialLu
HaiDian District, Beijing, 1000
China

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