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Social Indicators Research

, Volume 134, Issue 2, pp 631–650 | Cite as

Understanding the Kuznets Process—An Empirical Investigation of Income Inequality in China: 1978–2011

  • Wenli Cheng
  • Yongzheng Wu
Article

Abstract

This paper investigates income inequality in post-reform China using both national time series and provincial panel data from 1978 to 2011. We identify a Kuznets inverted-U relationship between economic development and income inequality and show that this relationship was driven by the process of urbanization. We estimate that the Kuznets turning point occurred in the mid-1980s, and argue that increased urbanization after the mid-1980s had the effect of narrowing income inequality but its effect was more than offset by other factors. In particular, we found that low productivity in agriculture relative to that of the economy as a whole (i.e., dualism) and inflation were significant contributing factors to income inequality. We also present evidence to suggest that secondary education and higher education may have different effects on income inequality at the national level and at the provincial level.

Keywords

Kuznets curve Income inequality in China Theil index Urbanisation Dualism 

Notes

Acknowledgments

This project was supported by China Postdoctoral Science Foundation (Grant No. 2012M510736), Chinese State Scholarship Fund (China Scholarship Council, Visiting Scholar, Grant No. 201406725004), and College of Mathematics and Computer Science, Key Laboratory of High Performance Computing and Stochastic Information Processing (Ministry of Education of China), Hunan Normal University, Changsha, Hunan 410081, P. R. China.

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Copyright information

© Springer Science+Business Media Dordrecht 2016

Authors and Affiliations

  1. 1.Department of EconomicsMonash UniversityMelbourneAustralia
  2. 2.CEMA, Central University of Finance and EconomicsBeijingChina
  3. 3.College of Mathematics and Computer ScienceHunan Normal UniversityChangshaChina

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