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Frontiers of Economics in China

Front. Econ. China    2016, Vol. 11 Issue (4) : 608-634     DOI: 10.3868/s060-005-016-0031-6
Orginal Article |
Income Mobility and Income Inequality in Rural China
Matthieu Clément()
GREThA, Université de Bordeaux, 33608 Pessac Cedex, France
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Abstract

The economic literature has argued for a long time that income mobility could attenuate the degree of cross-sectional inequality by offering people opportunities to improve their socio-economic position. Using the longitudinal data from the China Health and Nutrition Survey (CHNS) from 1989 to 2011, we measure income mobility as the degree to which longer-term incomes are distributed more or less equally than yearly income. Five main results are emphasized. First, there is strong income mobility in rural China that partly offsets yearly income inequality. Second, income mobility has decreased since the 2000s, indicating that income distribution is becoming more rigid. Third, mobility is mainly associated with transitory income fluctuations, particularly in the two tails of the distribution. Fourth, income mobility has an equalizing effect on income distribution. Fifth, we show that non-agricultural income mobility has substantially increased over the period and that its equalizing nature has also recently increased. While the development of the non-agriculture sector in rural China was a crucial factor in explaining the increase in rural inequality until the mid-2000s, we suggest that the large-scale generalisation of such non-agricultural opportunities partly accounts for the decline in rural inequality observed since the mid-2000s.

Keywords income inequality      income mobility      rural areas      China     
Issue Date: 20 January 2017
 Cite this article:   
Matthieu Clément. Income Mobility and Income Inequality in Rural China[J]. Front. Econ. China, 2016, 11(4): 608-634.
 URL:  
http://journal.hep.com.cn/fec/EN/10.3868/s060-005-016-0031-6
http://journal.hep.com.cn/fec/EN/Y2016/V11/I4/608
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