Reports
Discussion Papers
No.025 Economic Reforms and Income Inequality in Urban China
by OKUSHIMA Shinichiro and UCHIMURA Hiroko
April 2005
ABSTRACT
This
paper
reports
the
results
of
an
analysis
of
changes
in
income
inequality,
and
in
its
determinants,
in
urban
China
since
the
economic
reforms
that
began
in
1978.
The
intention
is
to
identify
new
characteristics
of
economic
inequality.
It
first
shows
that
income
differentials
acrossand
in
provinces
widened
and
that
their
economic
rankings
were
becoming
fixed
during
the
period
from
1988
to
1995.
Second,
age
was
the
major
factor
in
inequality
in
1988,
while
education
became
the
important
factor
in
1995.
Third,
education
significantly
contributed
to
increasing
inequality
during
the
period.
Fourth,
the
higher
education-level
groups
had
less
within-group
inequality.
These
changes
reflect
the
penetration
of
the
market
mechanism
into
China
after
the
reforms.
However,
this
will
be
problematic
without
equality
of
opportunity.
Keywords:
Asia,
China,
Income
inequality,
Economic
reform,
Education,
Urban
JEL
classification:
D31,
J31,
P20
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