Income Inequality in the People's Republic of China: Trends, Determinants, and Proposed Remedies

TitleIncome Inequality in the People's Republic of China: Trends, Determinants, and Proposed Remedies
Publication TypeJournal Article
Year of Publication2014
AuthorsWang, Chen, Wan, Guanghua, and Yang, Dan
JournalJournal of Economic Surveys
Volume28
Issue4
Pagination686 - 708
Date Published2014
KeywordsChina, income distribution, inequality
Abstract

The issue of income inequality in the People's Republic of China (PRC) has attracted world-wide attention, leading to a sizable literature. This paper attempts to provide a nonexhaustive literature review of the PRC's inequality trends and determinants, and suggested government interventions. It discusses profiles of income inequality along three dimensions: interhousehold disparity, regional divides, and urban–rural gaps. This is followed by an exploration of the driving forces behind rising inequality, including the notorious hukou system, policy biases, location or geographic factors, globalization, and education. Finally, the paper summarizes and proposes government interventions for containing or reducing income inequality in the PRC. Important areas for future research are also suggested in the final section of the paper.