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A New Era pp 59-82 | Cite as

Why China’s Gini Coefficient Has Been Falling?

A Study Based on Income Sources
  • Tianyu Yang
  • Zhinan Cao
Chapter

Abstract

By decomposing the Gini coefficient and the Gini coefficient differences by income source, this chapter tries to explore the reasons why the Gini coefficient has been falling in recent years in China. The chapter’s analytical framework consists of two parts. The first is to decompose the Gini coefficient by income source, and the second is to decompose the differences between the Gini coefficient in a given year and the average value during the period observed into three components—the inequality effect, share effect, and correlation effect of each income source. The breakdown of Gini coefficient differences, in particular, facilitates a better estimate of how each income source contributed to the decrease in the Gini coefficient. It is found that while the decline in the wage inequality contributes the most to the decline in the Gini coefficient, the share effect of transfers is the main factor preventing the decline. Therefore, to decrease the Gini coefficient requires efforts to reduce the inequality in wages and transfers and adjust the share of transfers.

Keywords

Gini coefficient Income sources Wages Transfers 

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Copyright information

© The Author(s) 2019

Authors and Affiliations

  • Tianyu Yang
    • 1
  • Zhinan Cao
    • 2
  1. 1.School of EconomicsRenmin University of ChinaBeijingChina
  2. 2.China Securities Depository and Clearing Company LimitedHong KongChina

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