Contribution of household income components to the level and rise of inequality in urban China

Satya Paul*, Zhao Chen, Ming Lu

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

9 Citations (Scopus)

Abstract

This paper investigates how changes in the structure of household income have affected inequality in urban China during the reform period. We conducted an inequality decomposition analysis by income sources using the household-level data from the Chinese Household Income Project Surveys for 1988, 1995 and 2002. The analysis reveals that the contribution of wages and salaries to inequality has declined over the years. Business income, which served as the inequality enhancing component in 1988, has turned into an inequality reducing force in 1995 and 2002. The marginal analysis reveals that 1% increase in business income neutralises about two-thirds of the increase in inequality caused by an equivalent increase in wages and salaries. Some business issues and policy options are discussed.

Original languageEnglish
Pages (from-to)212-226
Number of pages15
JournalJournal of the Asia Pacific Economy
Volume22
Issue number2
DOIs
Publication statusPublished - 3 Apr 2017
Externally publishedYes

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