Yue Ximing

The Urban-Rural Income Gap and Inequality in China

Using new household survey data for 1995 and 2002, we investigate the size of Chinas urban-rural income gap, the gaps 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 Oaxaca-Blinder decomposition. Several key findings emerge. First, the adjustments substantially reduce Chinas 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. Copyright

Migrants as Second-Class Workers in Urban China? A Decomposition Analysis

In urban China, urban resident annual earnings are 1.3 times larger than long term rural migrant earnings as observed in a nationally representative sample in 2002. Using microsimulation, we decompose this difference into four sources, with particular attention to path dependence and statistical distribution of the estimated effects: (1) different allocation to sectors that pay different wages (sectoral effect); (2) hourly wage disparities across the two populations within sectors (wage effect); (3) different working times within sectors (hours effect); (4) different population structures (population effect). Although sector allocation is extremely contrasted, with very few migrants in the public sector and very few urban residents working as self-employed, the sectoral effect is not robust to the path followed for the decomposition. We show that the migrant population has a comparative advantage in the private sector: increasing its participation into the public sector does not necessarily improve its average earnings. The opposite holds for the urban residents. The second main finding is that population effect is significantly more important than wage or hours effects. This implies that the main source of disparity is pre-market (education opportunities) rather than on-market.

High Incomes in Monopoly Industries: A Discussion

本文应用Oaxaca-Blinder分解方法，把垄断行业高收入分解为合理和不合理两个 部分。实证分析发现，垄断行业与竞争行业之间收入差距的50%以上是不合理的。这 主要是行业的垄断造成的。由于目前收入统计未能反映垄断行业的高福利，以上测量 结果显然低估了垄断行业高收入中的不合理部分。 关键词: 垄断行业 收入差距 不合理收入 Using Oaxaca‐Blinder decomposition method, we decompose high income in monopoly industries into two parts: the reasonable and the unreasonable. Empirical analyses show that over fifty percent of the income gap between monopoly industries and competitive industries is unreasonable and is brought about mainly by industrial monopolies. As current income statistics do not count the high welfare benefits in monopoly industries, the above results clearly underestimate the unreasonable component of the high income in these industries.

The Urban-Rural Income Gap and Income Inequality in China

Studies of China’s inequality almost universally report that the gap between urban and rural household incomes in China is large, has increased over time, and contributes substantially to overall inequality. According to most estimates, mean per capita income in urban China is more than triple that in rural areas, giving China one of the highest urban—rural income ratios in the world. The size of this gap has been discussed in the Chinese official media, is noted in government and Communist Party reports, and is the motivation for major policy initiatives such as the ‘Build a Socialist New Countryside’ campaign of 2006, which aims to reduce the gap by boosting public spending in rural areas.