What is behind the income disparity in China? : the determinants, gap, and distribution of urban and rural income

다국어 초록 (Multilingual Abstract)

China’s rapid growth has been accompanied by unbalanced development domestically, transforming itself from one of the most egalitarian economics to one of the most unequal countries in Asia. This thesis intends to have a full-scale investigation of the determinants, gap and distribution of urban and rural income in China. Four waves of the China Health and Nutrition Survey (CHNS) household data, 2000, 2004, 2006 and 2009 are used in this research. Several analytical methods have been addressed: OLS and quantile regressions are used to find the income determinants; Blinder-Oaxaca decomposition is employed to study about the income gap; and stochastic dominance test is applied for understanding the urban-rural income distribution. Results show that urban-rural income disparity exists and increases from 2000 to 2004 but decreases from 2004 to 2009. Education and occupation are essential to determine one’s income level and the effects of those two factors are heterogeneous for people at different percentiles of the income distribution. For the urban residents, education is more valued for those who are at the higher quantiles of income. For the rural residents, the tertiary education exerts substantial benefits for those who are below the 95th percentile of the income distribution. People who do non-farm activities have much lower returns than people with other occupations. This is especially obvious for the people at the left tail of the income distribution. Results of decomposition show that around 20% of the income gap is unexplained by individuals’ attributes. We find this unexplained part can either enlarge or narrow the urban-rural income disparity. Last, the stochastic dominance test suggests urban-rural income disparity is mainly caused by differences between two groups in the lower tail of the income distribution, rather than differences in the upper tail.

목차 (Table of Contents)

• Abstract i
• List of Tables v
• List of Figures vi
• 1. Introduction 1
• 2. Background 4
• 3. Literature Review 7
• 4. Data and Income Determinants 11
• 4.1 Data 11
• 4.2 Income Determinants 14
• 5. Econometrics Analysis 18
• 5.1 Determinants of Urban and Rural Income 18
• 5.1.1 The methodologies and models 18
• 5.1.2 Results analysis 20
• 5.1.2.1 OLS estimation 20
• 5.1.2.2 Quantile estimation 27
• 5.2 Decomposition of Urban-Rural Income Gap 33
• 5.2.1 Methodologies and models 33
• 5.2.2 Results analysis 34
• 5.3 Comparison of Urban and Rural Income Distribution 38
• 5.3.1 Theory, methods and the test statistics 38
• 5.3.2 Data 41
• 5.3.3 Results analysis 42
• 5.3.3.1 Unconditional income 42
• 5.3.3.2 Conditional income 44
• 6. Summary and Conclusion 46
• 7. Policy Suggestions 49
• References 51