Inequality in China at the End of The 1980s: Locational Aspects and Household Characteristics

Gustafsson, Björn; Li, Shi

doi:10.1111/1467-8381.00051

Cited by 29 publications

(16 citation statements)

References 15 publications

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“…5 Three types of (per capita) income measures dominate in the literature, with occasionally small variation of an individual income measure (and some authors not providing an exact definition of their income measures). The first, most widely used income measure is household survey income as compiled by the NBS for rural and urban areas separately (see, for example, Paul B. Trescott (1985), Irma Adelmann and David Sunding (1987), John Knight and Lina Song (1991), Stephen Howes (1993), Björn Gustafsson and Shi Li (1998), or Dennis Yang (1999). In the rural case, household income includes the value of self-produced-self-consumed goods and services, with, alternatively, rural data also available for monetary inc ome only.…”

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Spatial Price Differences in China: Estimates and Implications

Brandt

Holz

2006

Economic Development and Cultural Change

241

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Prices differ across space: from province to province, from rural (or urban) areas in one province to rural (or urban) areas in another province, and from rural to urban areas within one province. Systematic differences in prices across a range of goods and services in different localities imply regional differences in the costs of living. If high-income provinces also have high costs of living, and low-income provinces have low costs of living, the use of nominal income measures in explaining such economic outcomes as inequality can lead to misinterpretations. Income should be adjusted for costs of living. We are interested in the sign and magnitude of the adjustments needed, their changes over time, and their impact on economic outcomes in China. In this article, we construct a set of (rural, urban, total) provincial-level spatial price deflators for the years 1984-2002 that can be used to obtain provincial-level income measures adjusted for purchasing power. We provide illustrations of the significant effect of ignoring spatial price differences in the analysis of China's economy. IntroductionPrice indices are standard statistical data that are constructed by statistical authorities across all countries. The key price index often is the Consumer Price Index (CPI). In the U.S., for example, the CPI serves as an economic indicator used in formulating fiscal and monetary policy, as a deflator of other economic series (for example, retail sales, or hourly and weekly earnings), and as a means of adjusting dollar values (for example, when social security benefits are indexed using the CPI). 1 But while the calculation and use of price indices are widespread, absolute price comparisons across localities are usually not po ssible. Thus, in the U.S., the Bureau of Labor Statistics compiles a nationwide urban CPI based on about 80,000prices recorded in 87 urban areas by aggregating individual commodity or area indices. 2 The commodities are specific to the local outlets; no data are collected on the price of one specific commodity in different areas of the U.S. A comparison of the absolute price level in one locality with that in another locality, thus, is not possible for the U.S.China's National Bureau of Statistics (NBS), like the Bureau of Labor Statistics in the U.S., publishes a number of official price indices, including national and provincial CPIs, as well as separate CPIs for rural and urban areas at both the national and the provincial level.These price indices allow a comparison of the changes in the level of consumer prices over time across different localities, but do not permit a comparison of absolute price levels between different localities at a given point in time. Like the Bureau of Labor Statistics, the NBS does not publish data on the individual prices and quantities underlying the provincial price indices it constructs.The ability to compare the absolute price level across localities at a point in time can be important, however. The prices that consumers pay, even for identical products, are ...

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Spatial Price Differences in China: Estimates and Implications

Brandt

Holz

2006

Economic Development and Cultural Change

241

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“…A variety of characteristics can influence per capita household incomes (Miles, 1997; Gustafsson and Li, 1998, 2001; Knight and Song, 1999, ch. 3; Morduch and Sicular, 2000).…”

Section: Factors Underlying the Urban–rural Income Gapmentioning

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The Urban–rural Income Gap and Inequality in China

Sicular

Yue

Gustafsson³

et al. 2007

Review of Income and Wealth

Self Cite

481

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Using new household survey data for 1995 and 2002, we investigate the size of China's urban-rural income gap, the gap's contribution to overall inequality in China, and the factors underlying the gap. Our analysis improves on past estimates by using a fuller measure of income, adjusting for spatial price differences and including migrants. Our methods include inequality decomposition by population subgroup and the OaxacaBlinder decomposition. Several key findings emerge. First, the adjustments substantially reduce China's urban-rural income gap and its contribution to inequality. Nevertheless, the gap remains large and has increased somewhat over time. Second, after controlling for household characteristics, location of residence remains the most important factor underlying the urban-rural income gap. The only household characteristic that contributes substantially to the gap is education. Differences in the endowments of, and returns to, other household characteristics such as family size and composition, landholdings, and communist party membership are relatively unimportant.

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“…Previous studies on income inequality changes in China focused mainly on the period up to the mid1990s ( Knight and Song 1991;Kahn, Griffin, and Zhao 1992; Aaberge and Li 1997;Gustafsson and Li 1997Knight and Li 1999;Yang 1999; Khan and Riskin 2000;Riskin, Zhao, and Li 2001 88, 1988-95, and 1995-99, respectively. Income inequality also increased and this increase also varied across different periods of economic reform (Figure 12.1).…”

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“…By the mid 1990s, labour mobility across urban regions and between rural and urban areas increased (Meng 2000;West and Zhao 2000) and the rate of return to different levels of labour market skills widened (Knight and Song 1999). Accompanying this reform process, income inequality increased sharply (Kahn, Griffin, and Zhao 1992; Aaberge and li 1997; Gustafsson and li 1997Gustafsson and li , 1998Gustafsson and li , 1999Knight and Li 1999;Yang 1999;Khan and Riskin 2000;Riskin, Zhao, and Li 2001). The ratio of the tenth to the first income decile increased from 295 per cent in 1991 to 378 per cent in 1995.…”

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China 2002: WTO entry and world recession

2012

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Inequality in China at the End of The 1980s: Locational Aspects and Household Characteristics

Cited by 29 publications

References 15 publications

Spatial Price Differences in China: Estimates and Implications

Spatial Price Differences in China: Estimates and Implications

The Urban–rural Income Gap and Inequality in China

China 2002: WTO entry and world recession

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