The Trend of the Gini Coefficient of China (1978-2010)

Journal of Chinese Economic and Business Studies, Forthcoming

50 Pages Posted: 29 Mar 2018 Last revised: 7 Jan 2020

See all articles by Jiandong Chen

Jiandong Chen

Southwestern University of Finance and Economics

Ming Pu

Southwestern University of Finance and Economics (SWUFE) - Research Institute of Economics & Management

Wenxuan Hou

University of Edinburgh - Business School

Date Written: August 27, 2019

Abstract

This study proposes a new approach to analyse the effects of an overlap term on the calculation of the overall Gini coefficient and estimates China’s Gini ratios since the adoption of the economic reform and open-door policies. A decomposition of the Chinese Gini coefficient for 1978–2010 reveals that the key factor contributing to income inequalities is the income disparity between rural and urban inhabitants. We further investigate the features of this income inequality between rural and urban areas and employ statistical approaches to evaluate the effects of urbanisation and rural-to-urban average income on nationwide income inequality. The results show that accelerating the pace of urbanisation is mainly responsible for decreasing China’s income disparity. Drawing on these results, we conclude with suggestions for related policies.

Keywords: Chinese Gini Coefficient; Decomposition of Gini Coefficient; Urbanisation; Income Disparity; Rural–Urban Income

JEL Classification: D31; I32; O15

Suggested Citation

Chen, Jiandong and Pu, Ming and Hou, Wenxuan, The Trend of the Gini Coefficient of China (1978-2010) (August 27, 2019). Journal of Chinese Economic and Business Studies, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3150410 or http://dx.doi.org/10.2139/ssrn.3150410

Jiandong Chen (Contact Author)

Southwestern University of Finance and Economics ( email )

55 Guanghuacun St,
Chengdu, Sichuan 610074
China

HOME PAGE: http://cjd.weebly.com

Ming Pu

Southwestern University of Finance and Economics (SWUFE) - Research Institute of Economics & Management ( email )

55 Guanghuacun Street
Chengdu, Sichuan 610074
China

Wenxuan Hou

University of Edinburgh - Business School ( email )

29 Buccleuch Place
EDINBURGH, Scotland EH89JS
United Kingdom

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