Subsidising Inequality: Economic Reforms, Fiscal Transfers and Convergence Across Chinese Provinces

Kiel Working Paper No. 758

Posted: 7 Feb 1997

See all articles by Martin Raiser

Martin Raiser

European Bank for Reconstruction and Development

Date Written: August 1996

Abstract

The paper investigates per capita income convergence across Chinese provinces over 1978-1992 period. If confirms previous studies which find a reduction in inter-regional income inequality over the course of economic reforms. However, the rate of convergence has declined since 1985 as a result of two factors. First, the shift from rural to industrial reforms has disproportionately benefited the relatively wealthier coastal provinces. Second, the still existing system of inter-provincial fiscal transfers has prevented convergence among interior provinces, as transfers have gone to the richer among them, mainly to compensate for incomplete reforms elsewhere. The paper recommends a fundamental overhaul of inter-provincial fiscal relations in order to ensure that the process of income convergence continues in the future.

JEL Classification: O23, O41, O53

Suggested Citation

Raiser, Martin, Subsidising Inequality: Economic Reforms, Fiscal Transfers and Convergence Across Chinese Provinces (August 1996). Kiel Working Paper No. 758, Available at SSRN: https://ssrn.com/abstract=4626

Martin Raiser (Contact Author)

European Bank for Reconstruction and Development ( email )

One Exchange Square
London EC2A 2JN
United Kingdom
+44 20 7338 7231 (Phone)
+44 20 7338 6110 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
794
PlumX Metrics