Household Income Determination and Regional Income Differential in Rural China

meng, xin and wu, harry (1994): Household Income Determination and Regional Income Differential in Rural China. Published in: Asian Economic Journal , Vol. 1, No. 12 (1998): pp. 65-88.

Abstract

Regional income dispersion is a sensitive issue in China in terms of judging the impact of economic reform. This study looks closely at the issue as to what are the determinants of income variation among households in general, and which are the key determinants of income dispersion among different regions. The study uses the data from a sample survey on 1000 rural households in five Chinese provinces. Household income equations are estimated to assess the determinants of income variations among China’s rural households. Blinder’s (1973) decomposition approach is used to determine whether the regional income differential is mostly due to regional endowment differential or regional premium. Among other interesting findings, the major determinant of regional income dispersion seems to be the degree of regional marketisation. Moreover, the rate of return to most factors is significantly different across regions. These findings suggest that further economic reform in less developed regions and the open up of inter-regional trade and factor mobility are the most important factors in reducing the regional income differential

• Item Type: MPRA Paper
• Institution: Economics, Research School of Pacific and Asian Studies, Australian national University
• Language: English
• Keywords: household income; regional differential; rural china
• Subjects: J - Labor and Demographic Economics > J4 - Particular Labor Markets > J43 - Agricultural Labor Markets; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R2 - Household Analysis > R23 - Regional Migration ; Regional Labor Markets ; Population ; Neighborhood Characteristics

References

Becker, G. S., 1962. "Investment in Human Capital: A Theoretical Analysis", Journal of Political Economy. 70 (5) pt. 2, pp. 9-49. Blinder, A. S., 1973. "Wage Discrimination: Reduced Form and Structural Estimations", The Journal of Human Resources, 8, pp. 436-55. Byron, R. P. and Manaloto, E. Q., 1990, "Return to Education in China", Economic Development and Cultural Change, 38, pp. 783-796. Caballe, J., 1993, “On Endogenous Growth with Physical and Human Capital” Journal of Political Economics, 101(6). Datta, G. and Meerman, J., 1980, “Household Income or Household Income per capita in Welfare Comparisons” Review of Income and Wealth, 28, pp. 401-418. Gelb, A., 1990. "TVP Workers' Incomes, Incentives, and Attitudes", in W.A. Byrd and Q. Lin (eds), China's Rural Industry. Oxford: Oxford University Press. pp. 280-98. Kuznets, S. S., 1976, “Demographic Aspects of the Size Distribution of Income: An Exploratory Essay, Economic Development and Cultural Change, 25(1), pp. 1-94. Gregory, R. R. and Meng, X., 1996, “Wage Determination and Occupational Attainment in the Rural Industrial Sector of China”, Journal of Comparative Economics, forthcoming. Lucas, R. E., 1988, “On the Mechanics of Economic Development” Journal of Monetary Economics, 22, pp. 3-42. Mincer, J., 1974. Schooling, Experience and Earnings. New York: National Bureau of Economic Research. Romer, P. M., 1986, “Increasing Returns and Long-run Growth”, Journal of Political Economics, 1990, “Endogenous Technological Change”, Journal of Political Economics, 93(5). Sloane, P. J., 1985. "Discrimination in the Labour Market" Chapter 3 in R. Millward, M. T. Sumner and G. Zis (ed.) Labour Economics, New York: Longman Group Limited. CSSB (State Statistical Bureau of China), various issues, Chinese Statistical Yearbook,. Beijing: Chinese Statistical Press. Wu, H. X., 1994a, “Rural Enterprise Contribution to Growth and Structural Change”, in Findlay, Watson and Wu (eds.), Rural Enterprises in China, London: Macmillan Press _____ 1994b, “The Rural Industrial Enterprise Workforce”, in Findlay, Watson and Wu (eds.), Rural Enterprises in China, London: Macmillan Press _____ 1996, “A note on the CERU-MoA grain farm household survey in China”, China Economic Review, Vol 7(2), pp. 97-104.