Working Papers

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Adopting a simple demand system, we aim to re-estimate China.s income inequality using the Urban Household Survey (UHS) data assuming the expenditure data is well measured. We find income inequality growth exceeds the growth rate of consumption inequality, although income inequality is still lower than consumption inequality over the period 2003-2009. We also .nd that the increase of income inequality is mainly due to the increase of inequality between the middle expenditure group and the high expenditure group, while the income inequality between the middle-expenditure group and the low-expenditure group slightly decreases. This not only confirms the presence of pervasive grey income, also implying that grey incomes mostly exist in the high-expenditure stratum. Following Aguiar and Bils (2015), we assume that the Engel coeffcient is log-linear and that the income elasticities are constant over time. In the robustness test, we relax the assumptions and find that the estimation results are still robust.
Most poverty research has explored monetary poverty. This paper presents and analyses the global Multidimensional Poverty Index (MPI) estimations for China. Using China Family Panel Studies (CFPS), we find China’s global MPI was 0.035 in 2010 and decreased significantly to 0.017 in 2014. The dimensional composition of MPI suggests that nutrition, education, safe drinking water and cooking fuel contribute most to overall non-monetary poverty in China. Such analysis is also applied to sub-groups, including geographic areas (rural/urban, east/central/west, provinces), as well as social characteristics such as gender of the household heads, age, education level, marital status, household size, migration status, ethnicity, and religion. We find the level and composition of poverty differs significantly across certain subgroups. We also find high levels of mismatch between monetary and multidimensional poverty at the household level, which highlights the importance of using both complementary measures to track progress in eradicating poverty.
China’s Rural Minimum Living Standard Guarantee program (Dibao) is the largest social safety-net program in the world. Given the scale and the popularity of Rural Dibao, it is necessary to rigorously evaluate it so that policymakers know the extent to which the program meets its intended objective of reducing poverty. This paper develops some new methods and uses data from the 2013 Chinese Household Income Project (CHIP2013) to examine the targeting performance of the rural Dibao program. The paper has found that the Rural Dibao program suffers from very low targeting accuracy, high exclusion error, and inclusion error, and yields a significant negative social rate of return. It discusses possible causes and argues that the fundamental mechanism has to be redesigned to increase the effectiveness of the program. The paper makes some recommendations to reform Dibao that will significantly improve targeting and reduce the cost of running the program. That will help China to achieve its goal of eradicating extreme poverty by 2020.
Numerous empirical studies have documented a strong association between social networks and individuals' migration decisions. Few papers formally analyse how social networks affect both migration decisions that affect the evolution of social networks overtime, and labor market outcomes. In order to understand these relationships, I develop and estimate a dynamic model with return and repeated migration, social network investment decisions and labor market transitions. The model distinguishes between two channels through which social networks may affect migration decisions: (1) a direct effect on migration costs and (2) an indirect effect on labor market outcomes through the job arrival rate. I use the model to study one of the largest ongoing internal migrations in human history: rural-urban migration in China. To estimate the model, I use panel data from the Chinese Household Income Project (2007-2009). The estimation results show that social networks affect both channels significantly. Individuals with networks have 40% higher job arrival rate than those without networks on average. In addition, social networks reduce average migration costs by 7%. I also show that policies that directly lower migration costs may be more cost effective at increasing rural-urban migration in China. These policy experiments also show that without considering the impact of network investment, the government has to spend more to offset the effect of no investment in social networks.
We use 1995, 2002 and 2013 CHIP data to investigate the urban household consumption expenditure inequality. The overall inequality of urban household consumption expenditure measured by Gini coefficient slightly decreases from 0.33 in 1995 to 0.32 in 2002, but increases to 0.36 in 2013. However, the percentile ratio of p90/p10 shows that consumption inequality increases all the time. Besides, the inequality of basic food consumption is much smaller than the overall consumption, its contribution to the overall consumption inequality decreases from 20% in 1995 and 2002 to 15% by 2013, and its share also decreases steadily from 34% in 1995 to 30% in 2002 and further to 24% in 2013, and finally its share steadily decreases as the overall consumption level moving up the distribution in each of the three years. The inequality of housing consumption is much larger than overall consumption but decreasing over time, its contribution to the overall consumption inequality increases 35% in earlier two years to 40% by 2013, and its share also sharply increases from 23% in 1995 to 30% in 2002 and further to 38% in 2013, besides its share shows upward sloping as overall consumption level increases in each of the three years.
Past studies of the gender wage gap in urban China have found that since the 1980s the gap between men and women’s wage earnings has progressively widened. Using data from the CHIP urban household surveys for the years 1995, 2002, 2007 and 2013, we provide consistent estimates of the gender wage gap in urban China and investigate factors contributing to that gap. From 1995 to 2007 we find a substantial, progressive widening of the gap. From 2007 to 2013 we find that the gender wage gap took a new direction and narrowed. We discuss the gender wage gap in relation to structural changes in the urban economy and life cycle events, as well as government policies that affect women and men differentially. Oaxaca-Blinder decompositions reveal that the contribution of differences in characteristics between men and women to the wage gap had declined over time and, as of 2013 the gap was almost entirely unexplained. We investigate key factors underlying the gender wage gap in recent years, specifically, the relationships between wage earnings of women versus men and sector of employment as well as individual characteristics such as age, education, marriage and children.
The paper investigates the poverty status, trend and its determinants of Han and ethnic minorities in rural China using the CHIP 2002 and CHIP 2013 data. The study finds that household endowments and regional differences mainly lead ethnic minorities and Han households differ. When household endowments and regional differences are being equal, ethnic minorities had even lower probability of falling into absolute poverty than Han households in 2002; and there was no significant difference in probability of f falling into absolute poverty between Han and ethnic minority households in 2013. The decomposition results indicate that higher educational returns for ethnic minorities was the major reason makes the ethnic minorities had lower probability of falling into poverty than Han households in 2002. In sum, the supportive policy from both central and local governments is effective to reduce the poverty for ethnic minorities and ethnic minority areas. The study provides some policy implications for China to get ridding of poverty, in particular for ethnic minority areas. There could be more supports for ethnic minority areas, expand the policy implementation in ethnic minority area. We also suggest improving the educational achievement for people living in poverty. All the ethnic minority children from household under poverty should have equitable access to qualified education and increase their returns from education.
The inequality of wealth in China has increased rapidly in recent years. Prior to 1978 all Chinese households possessed negligible wealth. China therefore presents a fascinating case study of how inequality of household wealth increases as economic reform takes place, marketisation occurs, and capital accumulates. Wealth inequality and its growth are measured and decomposed using data from two national sample surveys of the China Household Income Project (CHIP) relating to 2002 and 2013. Techniques are devised and applied to measure the sensitivity of wealth inequality to plausible assumptions about under-representation of and under-reporting by the wealthy. An attempt is made to explain the rising wealth inequality in terms of the relationships between income and wealth, house price inflation, differential saving, and income from wealth.
This study examines these long-term changes in the distribution of rural income in China from the late 1980s until the mid-2010s. The major findings are summarized as follows. First, contrasting trends are found in the contributions of agricultural income and wage earnings, which reflects structural change in rural income caused by the dual process of economic development and systemic transition in the post-Mao era. Second, it is found that inequality in wealth is becoming increasingly important for understanding rural inequality. Third, there found small but substantial improvements in the redistributive and poverty impacts of public transfers before and after the implementation of pro-rural public policies in the first decade of this century, which has been a historic reversal in the long-lasting urban-biased public policy in contemporary China.
This paper aims to throw new light on the emergence of the Chinese economic middle class using data from the China Household Income Project from 2002, 2007 and 2013. The approach is to define “middle class” as having an income high enough to not be regarded as poor if living in a high income country but also low enough for being regarded as not rich living in such a country. We find that between 2002 and 2013 China’s population structure was transformed from a pyramid shape with a majority having rather low income and declining numbers at higher incomes to a more olive shape as the middle class emerged. In 2013 according to our definitions a third of China’s urban households were middle class in contrast to only a small minority of the rural households and rural migrants living in urban areas. A simulation shows that if household incomes grow by 6.5% per annum to 2020 uniformly for all households in China, the middle class would almost double and a majority of urban residents would be classified as middle class in 2020; however, only 13 percent of rural inhabitants would in 2020 be classified as middle class. In the paper we also examine the characteristics of middle class versus lower income persons, for example, location of residence, education, Communist party membership, and savings rate.
This paper investigates how household income, income inequality and poverty among urban residents in China have developed since 1988 with an emphasis on the period 2007 to 2013. We use CHIP data and show that during a period when many countries in the West experienced stagnating or falling incomes household income in urban China grew by on average 7 percent per annum. However, different from during previous periods earnings grew by not more than 3 percent per annum, while pensions and imputed rents of owner occupied housing grew considerably faster. The trend of fewer and fewer persons in urban China having income lower than a poverty line expressing a constant purchasing power continued between 2007 and 2013. We also show that income growth from 2007 to 2013 was slower in the lower part of the income distribution and thus the trend of increased income inequality in urban China continue. The same applies to the number of people falling under a relative poverty line.
Using the China Household income Project (CHIP) 2002, 2007, and 2013 data, this chapter examines the effects of a series of social policy reforms on the economic distances between the poor and the rich in urban, rural, and migrant families during this period. We find that, in urban areas, pensions helped narrow the economic distances consistently over the years, while other social benefits—including health insurance, social assistance, supplementary income, and in-kind benefits—had little or no redistributive impact. Both rural and migrant social benefits turned from being regressive in 2002 to progressive in 2013. In rural areas, supplementary income and in-kind benefits in the form of agricultural and livelihood subsidies played the most significant redistributive role among the social benefits in 2013, while private transfers also helped narrow the economic distances substantially. For migrants, health benefits and taxes and fees helped narrow the economic distances in 2013, despite to a smaller extent as compared to the rural social benefits. Despite the social policy expansions during this period, in both urban and rural China, market forces still played the dominant role in widening the economic distances between the poor and rich, which trumped the redistributive effects of the social benefits. These results suggest that China’s future social policy reforms face continued challenges in unifying the unbalanced urban-rural-migrant systems and keeping pace with the disequalizing market forces.
Objective of this work is to evaluate redistributive role of public transfer on inequality in China. We attempt to answer two questions in this paper. Firstly, does inequality of after-transfers income narrow, compared to that of before-transfers? Secondly, given scale and distribution of the existing public transfer, will a small percentage increase in the transfers narrow or widen the inequality of total income? By employing methodologies of MT index and decomposition of Gini coefficient of total income by its sources, we find positive answer to the first question and negative answer to the second question. Namely, the public transfers have a positive role on inequality, in the sense that Gini coefficient of after-transfer income becomes small, compared to that of before-transfer income. On the other hand, the public transfers have a negative role on the inequality, as the current inequality will go up if there is a universal increase in the public transfers for all recipients. Of all components of the public transfers, formal sector pension benefits and medical expense reimbursements are disequalizing for inequality of the total income, while the Dibao and rural pension benefits are equalizing.
The purpose of this paper is to analyze the rural poverty structures. According to China Household Income Project Data (CHIP1988, 1995, 2002, 2007, 2013), this paper mainly includes two sections: (1) Present the anti-poverty trend and find the problems in recent three decades. (2) Analyze the poverty structures in the new period on the basis of comparison with other periods. There are three aspects considered in poverty structures: the factors may raise household income; the factors may reduce household consumption expenditure; other factors related with poverty alleviation goals. Conclusions: along with the reduction of poverty rate, the poverty depth increased after 2007; along with the reduction of absolute poverty rate, the relative poverty rate kept increasing. Furthermore, according to the analysis of poverty reasons, this paper find the positive effects of rural social security policies on some features of households after 2007; but 16-60 age disable members, proportion of 0-15 age children, health problem of elders are still the important factors in the new period.
We document how the wage structure evolved between 1995 and 2013, using a national representative urban household survey. We find that China's wage level increased significantly and the wage structure had become increasingly unequal. Regional gap and human capital contributes in a major way to the overall wage inequality. The returns to education increased significantly since the 1990s and remained high after 2007, but the young cohorts have lower returns to education. An inverted U-shape of the wage-age profile is also more salient in 2013 than in previous years. Non-wage benefits contributed by employers are increasingly more important in an employee's compensation, and are more unequal than wages.
In this paper we present a family of violation indices that, by analogy with poverty indices, can emphasize the depth of violation to different degrees. We used CHIPs 2007 and 2013 to examine the extent to which minimum wages are complied with in China. And make a comparison with them.
与以往直接使用宏观数据回归得到教育与收入差距的关系不同, 本文通过构建理论模型解释教育扩展如何通过影响教育分布和教育收益率进而影响收入差距的作用机制,并利用中国家庭收入调查( CHIP) 1995、 2002、 2007、 2013 年的微观数据,以最新分解技术 FFL 分解方法重置权重构建反事实,分解出教育扩展对工资差距影响中的价格效应和结构效应。通过 FFL 分解方法对 CHIP2002 和 2013 年的收入及收入差距进行分解发现, 教育扩展的结构效应提高了所有人的收入,价格效应使得“ 穷者越穷,富者越富” 。 相比于 2002年, 2013 年整体收入差距扩大, 高收入群体的收入差距扩大更为明显,教育对收入差距的结构效应为负,即教育扩展通过教育分布缩小了收入差距,但这一影响被教育的价格效应抵消, 教育扩展对收入差距的价格效应为正,且远大于结构效应。因此, 现阶段我国的教育扩展并未缓解反而扩大了城镇职工工资性收入差距。
Workshop on Minimum Wages and Field Experiment will be hold in Nov. 7th, 2017.