Working Paper: NBER ID: w29383
Authors: Martin Ravallion; Shaohua Chen
Abstract: In a rare example of an explicit national goal for income distribution besides reducing poverty, China’s leadership has recently committed to expanding the middle-income share—moving to a less polarized “olive-shaped” distribution. Recognizing the potential trade-offs, the paper asks whether China’s experience indicates that income-polarization was a by-product of past economic progress, including poverty reduction. The paper does not find robust time-series evidence of polarizing effects alongside either economic growth or population urbanization (including among those below the national median). There was strong co-movement between polarization and inequality. Larger urban-rural gaps in mean incomes are strongly polarizing in China.
Keywords: No keywords provided
JEL Codes: I32; O15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| economic growth (O49) | income polarization (D31) |
| poverty reduction (I32) | income polarization (D31) |
| income polarization (D31) | income inequality (D31) |
| urban-rural gaps in mean incomes (R11) | income polarization (D31) |
| economic development (O29) | income polarization (D31) |
| economic development (O29) | income inequality (D31) |
| degree of urban-rural sectoral fractionalization (R39) | income inequality (D31) |
| degree of urban-rural sectoral fractionalization (R39) | income polarization (D31) |