The effects of social security expenditure on reducing income inequality and rural poverty in China

Social security has,as one of its primary aims,the provision of financial support to those deemed to be poor or facing the threat of poverty.Based on China's national statistical data covering social insurance,social assistance,and social welfare between the period 1978–2018,this paper evaluates the effect of social security expenditure in reducing income inequality and rural poverty with cointegration analysis.It was found that there is a positive correlation between social security expenditure and the income gap of urban and rural residents in the long run,but the effect is very limited;nearly 99%of the changes of the urban–rural income gap come from its own contributions.Further research also shows that the elasticity of rural poverty incidence to social security expenditure is–0.2255,which indicates social security expenditure helps reduce rural absolute poverty.Based on these findings,the policy implications can be that much social security expenditure and a more equitable social security system should be encouraged.It will become one of the major anti-poverty strategies after 2020 in China when we win the battle against absolute poverty.

Income inequality and growth from functional orientation and spatial policy:Case study of Tibet,China

Economic inequality and poverty are problemsexperiencedbymanycountries.Considerable attention has been paid to these issues in recent times.Studies on economic inequality have been characterized by geographical disparities and a lack of consideration of functional orientation.As one of the most typical and featured mountainous areas in Western China,Tibet demonstrates both the necessity and urgency of conducting studies on income inequality and growth issues.This paper proposes to address these problems by exploring the temporal and geographical variations in income inequality in Tibet,thereby revealing the differences in functional zones.Spatial Markov chains and panel regression analysis were applied to identify the spatial-temporal dynamics of income disparity.The results of this study show that(1)the overall income inequality in Tibet shows an expanding trend in the period 2005–2010 and a converging trend in the period 2010–2015,and there is a large disparity in income inequality between functional zones;(2)Tibetan farmers and herdsmen may face great difficulties in achieving substantial growth in the near future;(3)frontier counties,cultivated land,and grassland areas have negative impacts on income growth,while cordyceps counties,GDP per capita,agricultural product proportion,transfer payments,the ratio of nonagricultural employment to the total employment,the length of the average schooling year,and the slaughter rate of cattle and sheep have positive impacts;and(4)functional orientation has made great differences to income inequality and its mechanism.In light of these results,evidence-based policies have been formulated to boost average household income and narrow income inequality in Tibet.

Attitudes toward income inequality:perspectives from farmers living in a poverty-stricken rural area of China

The attitude of the least advantaged people to income inequality is important in regard to social stability,which is also a major concern of the government and researchers in China.This paper aimed to investigate the perceptions and attitudes of the least advantaged people toward income inequality in China.An empirical analysis was conducted on farmers' attitudes to income inequality based on a questionnaire survey of 308 farmers in four villages in Yingshan,Hubei Province.Our results show that the respondents consider the income inequality as severe,and ability,hard work,and individual choices are the major determinant factors of income.It is shown that farmers in less developed areas are more likely to accept income inequality,and they ascribe this to their own failure rather than to social injustice.However,it is not the case that people living in poverty-stricken areas are satisfied with antipoverty policies;and these policies are expected to be further improved to increase the income of the poor.

Income inequality and financial crises:evidence from the bootstrap rolling window

This study aims to investigate the validity of the Rajan hypothesis,which argues that increasing income inequality plays a key role in the outbreak of financial crises.The relationship between income inequality and credit booms are examined in 10 developed countries:Australia,Canada,Denmark,Finland,France,the United Kingdom,Japan,Norway,Sweden,and the United States.In doing so,a bootstrap rolling-window estimation procedure is used to detect any possible causal link between inequality and credit booms in financial crisis sub-periods.The results reveal that the Rajan hypothesis is supported for the 1989 crisis in Australia,the 1991 and 2007 crises in the United Kingdom,and the 1929 and 2007 crises in the United States.Therefore,increasing income inequality has positive predictive power on credit booms in Anglo-Saxon countries.However,the hypothesis is not confirmed for Scandinavian and continental European countries.Our study is novel in its use of the bootstrap rolling-window procedure,which allows us to detect the possible relationship between inequality and credit booms in financial crises.The findings suggest that a progressive taxation policy or investments to accumulate human capital and increase the labor force are more beneficial than temporary solutions.

Global Income Inequality and Poverty Reduction:Trends and Remedies

There is a global consensus that world economy need not only grow faster,but also grow in a way that the poor receive a greater share of the benefits of that growth.It is well documented that income inequality is on the rise,with the richest 10%earning up to 40%of total global income.The poorest 10%earn only between 2%and 7%of total global income.After long time of neglect,inequality has re-entered the mainstream development policy agenda at both national and global levels indicating that relevant policies should be universal in principle paying attention to the needs of disadvantaged and marginalized populations.As highlighted in almost all SDG’s documents,income inequality is a global problem that requires global solutions.This involves improving the regulation and monitoring of financial markets and institutions,encouraging development assistance and foreign direct investment to regions where the need is greatest.Facilitating the safe migration and mobility of people is also key to bridging the widening divide.SDG 10 encompasses 10 targets with the objective of promoting social,economic,and political inclusion of all,irrespective of age,sex,disability,race,ethnicity,origin,religion,or economic or other status.Achieving SDG 10 reaffirms that the 2030 development agenda will focus not only on eradicating poverty but also on tackling inequalities in all its forms through adopting sound policies to empower the bottom percentile of income earners,and promote economic inclusion of all regardless of sex,race,or ethnicity.This paper analyses the resent status of income inequality and its relationship with economic growth and poverty in selected developing countries.The paper highlights that there is a triangular relationship between income distribution,poverty and economic growth;while accelerated economic growth is a primary factor in reducing poverty,inequalities can constrain poverty reduction significantly.

The Impact of Finance Development on the Income Inequality Between the Urban and the Rural： Evidence From Henan Province in China

Finance is one important factor to promote economic development. Meanwhile, it also has a dubious effect on income inequality in accordance with the prior literatures. In order to promote economic development, most of China’s governments provide many policies to boost financial development. However, these policies should also be evaluated with its impact on the income inequality. As one important province in China, Henan also wants to have a rapid economic development with policies on financial development. Therefore, this paper uses the vector autoregressive model to detect the impact of financial development on income inequality between the urban and the rural, and the results suggest one positive impulse on financial development would cause income inequality to be increased immediately, but to be decreased after the fourth period. Thus, Henan’s policies on financial development would achieve the goal to promote economic development without the detrimental effect on income inequality.

Income Inequality in Mountain Areas: The Case of Agroforestry Farming Systems in Uluguru Mountains, Tanzania

Land degradation due to use of unsustainable agricultural practices has affected many communities in rural mountain areas rendering them to be more vulnerable to income poverty and inequality. In this case, agroforestry systems promise to offer great solutions as they can be developed in unfavourable conditions where other production systems would either rapidly degrade the land or otherwise would not be possible. However, little is known whether agroforestry can address issues of income inequality in mountain areas. Hence, we conducted a study to investigate the nature and determinants of income inequality in Uluguru Mountains, Tanzania. Specifically, we used the cross-sectional research design and we calculated the income percentile shares, Gini coefficients and the coefficient of variation (CV), to pinpoint the nature of income inequality in the study area. The determinants of income inequality were analysed using the step by step multiple linear model. The results of analysis suggested prevalence of income inequality. Crop production was the main source of income in the agroforestry systems of the study area. Earnings from crops and timber were decreasing income-inequality amongst smallholder farmers. Our disaggregated analysis showed that off-farm income was also decreasing income-inequality for farmers with farmlands located close to homestead, for female-headed households, for farmers who did not access extension services, and those who were members of community-based financial institutions. Estimated incomes increased with household assets, size of farmland, and age of household head. However, the same decreased with household size. We found gender disparity to be one of the key issues that need attention in formulating future policies to reduce inequality. We recommend promotion of livelihood diversification as well as the designing and implementation of tailor-made training and farm financing mechanism to help the less resource-endowed farmers in mountain areas to raise their economic portfolios and social status and combat income poverty and inequality.

Innovation,financial permeation,and income inequality:From a dynamicperspective in China

Innovation is a driving force of wealth distribution.To explore its time-varying effect on income inequality,we propose a nonparametric model using the local linear dummy variable estimation(LLDVE)method.Based on province-level panel data from China spanning from 2006 to 2020,we find that innovation initially reduces income disparity until 2009,then exacerbates it from 2013 to 2016,and alleviates inequality again over 2018-2020.We further verify that financial permeation serves as a catalyst in the inequitable income distribution driven by innovation.However,this moderating effect reverses the relationship between green innovation and income inequality.This suggests that we should enhance the financial service towards all aspects of innovation beyond its support of green innovation.

Does Chinese Environmental Policy Affect Income Inequality? Evidence from the Central Environmental Protection Inspection

This paper investigates the effect of environmental policy on income inequality.It focuses on the central environmental protection inspection led by the central government in China.Using a diference-in-diferences approach,it finds evidence that environmental regulation decreased the per capita income and enlarged the gap between urban and rural income while showing an insignificant effect on employment.Although the policy can reduce pollution levels and bring environmental benefits in aggregate,the findings of this study suggest that the regulations appear to have reduced the proportion of manufacturing industry and hindered general innovation and investment from entrepreneurs,which resulted in greater inequality.Rural residents suffered more from environmental regulation due to relatively high migration costs and their disadvantaged human resources on the aspects of health,education level,and skills.The local government's execution incentive can also play a key role in the effectiveness of environmental policy.Regions with lower GDP growth targets and younger government leaders were affected significantly with regard to the income growth of local residents and the urban-rural income gap.

China’s New Rural Income Support Policy:Impacts on Grain Production and Rural Income Inequality

This paper analyses the impact of agricultural tax abolition and direct income payments to grain farmers on grain production and rural inequality in China. To separate the impact of the income support measures from recent price trends for grains and inputs, and to account for differences in household responses, we use a village-level general equilibrium model that we calibrate for two villages with different degrees of market access in Jiangxi province. The results show that the income support policy does not reach its goal of promoting grain production. The increased incomes allow farm households to buy more inputs for livestock production and involve other activities that are more profitable than grain farming. Selling of rice outside the villages declines more than rice production, because households in the villages consume more rice when incomes rise. We further find that the income support measures tend to reduce income within a village, but that tax abolition tends to widen income inequality between villages.

SPECIAL ISSUE： INCOME INEQUALITY IN CHINA Market Reform and the Widening of the Income Gap

In the course of marketization in China, there has been a trend for the income gap to become ever wider. Some people have mistakenly attributed the gap to market reforms. This article provides a detailed empirical analysis of the changes in income distribution patterns and the reasons for the increasing income gap to clear up such misunderstandings. We believe the most important factors in the widening of the income gap and unequal income distribution are institutions and policies inherited from traditional economic planning; newly emerging systems and policies driven by departmental and local interests that run counter to market laws; lack of government action on gaps or distortions in the market; insufficient capital regulation and labor protection; and excessive government intervention in the economy.

Labor Market Reform,Income Inequality and Economic Growth in China

The year 1996 was a turning point both in terms of Chinese labor market reform aria m China＇s economic growth pattern. Before 1996, labor market reform was mainly implemented through adjustment of people＇s occupation and income structure. Since 1996, employment restructuring has led to differentiation in terms of employment status. Labor market reform in the former stage resulted in slow growth in wages, whereas reform in the latter stage enhanced economic efficiency. Both stages have enabled the Chinese economy to apply its comparative advantage of low labor cost. Labor market reform has also increased income disparity and, therefore, new challenges are posed in sustaining economic growth. China needs to adjust its development strategies and introduce labor market reform that can improve income equality, so as to achieve sustainable economic development.

Effects of Public Transfers on Income Inequality and Poverty in Rural China

This study examines the impacts of public transfers on income inequality and poverty reduction in rural China.It uses nationally representative rural household surveys from the China Household Income Project and classifies public transfers into threetypesuniversal,pro-poor,and reimbursable transfers-to compare the impacts of eachtype of public transfer in 2013and 2018.Estimated results show that the contributions of eachtypeof publictransfertoreducing incomeinequalityweregenerally small in both 2013 and 2018.However,the effects of reimbursable transfers were the largest of the three types.We also found that the poverty-reducing effects were the largest for reimbursabletransfers,and their impactshaveconsiderably improved inthewestern region.The impacts of pro-poor transfers were intermediate but have developed notably in the central region.These findings suggest that reimbursableand pro-poortransfers contributed mainly to reducing rural poverty but the impacts were heterogeneous among regions.

Subjective Social Status,Income Inequality and Subjective Perceptions of Mobility(2003-2013)

Using a sample of over 90,000 urban and rura1 residents from the Chinese Social Survey(CSS)and China Genera1 Social Survey(CGSS)from 2003 to 2013,we analyzed the structural features and influencing factors underlying subjective social status in China.Our findings indicate that over these years,such identification has consistently assumed the shape of a bowling pin:those who“identify with a low social status”account for more than half of respondents,a much higher proportion than in most countries.At the individual level,the net effect on subjective social status of such objective indicators as education,income and occupation has been relatively small,and lessened over the ten years.The correlation between subjective perceptions of mobility and subjective social status is quite strong,but the upward impetus provided by perceptions of upward mobility weakened over the period.At the macro-level,the tempo of economic growth failed to raise the level of class identification,and income inequality had a markedly negative effect.Our research findings further demonstrate that curbing the income gap and increasing opportunities for mobility are important for raising the level of class identification during the transition period.

Income Mobility and Income Inequality in Rural China

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.

Educational inequality and income inequality: An empirical study on China

Based on the endogenous growth theory,this paper uses the Gini coefficient to measure educational inequality and studies the empirical relationship between educational inequality and income inequality through a simultaneous equation model.The results show that:(1)Income inequality leads to educational inequality while the reduction of educational equality does not contribute to the decrease of income inequality,and there is no simple casual effect between them.However education expansion is beneficial to reduce educational inequality and income inequality.(2)Education relates to income inequality through the human capital transmission mechanism,but this mechanism does not automatically translate into a virtuous cycle of“educational equality←→income equality”.(3)In the long run,the reduction of educational inequality does not reduce income inequality,but income inequality has a negative instant-impact on educational equality.(4)At present,the level of educational investment and urbanization do not effectively promote educational equality.In addition,the robustness of the model used in this paper has been partly proved.

Chinese decentralization and income inequality between urban and rural residents--An empirical study based on the dual dimensions of internal and external budget

The paper firstly explains the mechanism of decentralization on income inequality from two theoretical dimensions of internal and external budget.Based on the re-measurement of income Gini coefficient and Chinese decentralization level,this paper establishes panel data model from national and regional perspective to empirically investigate the impact of Chinese decentralization on income inequality between urban and rural residents.Firstly,the promotion of budgetary income decentralization is conductive to reduce income inequality of urban and rural residents whether it is from the national or sub regional.Second,although the promotion of budgetary expenditure decentralization exacerbates the urban-rural income inequality in the national level,it could obviously reduce the urban-rural income inequality in the midwest with relatively low level of budgetary expenditure decentralization.Thirdly,the impact of extra-budgetary decentralization on income inequality is consistent,no matter in the whole country,in eastern or in western regions.This means that the extra-budgetary income decentralization makes the income inequality between urban and rural residents worse while the extra-budgetary expenditure decentralization reduces the income inequality between urban and rural residents with different degrees.Fourthly,the transfer payment,years of schooling and urban unemployment rate are conductive to narrow the income inequality between urban and rural residents while the impacts of economic development,urbanization and opening degree are obviously different in different regions.The above conclusions can not only be used for reference to further perfecting and reshaping the fair efficiency mechanism of Chinese decentralization,but also indicates the direction of the new fiscal and tax system reform.

China＇s Household Consumption Decline Amidst Rising Income Inequality： A Theoretical and Empirical Study

This paper studies the relationship between the widening urban-rural income inequality and weak household consumption demand in China. The theoretic model shows that households with higher income have lower average and marginal propensity to consume （APC and MPC）, and that the larger the income gap is, the weaker household consumption demand becomes. This paper tests the theoretical model with the panel data of 28 Chinese provinces, municipalities and autonomous regions from 1978 to 2009. The results show that with an increase of RMBIO, O00 in income, household APC drops by 25.6 percent and MPC by 7.0 percent,＂ and that if the income gap widens by one unit, household consumption rate drops by 6. 5 percentage points. Simulation results reveal that the widening urban-rural income inequality caused an extra drop of 3.42 percentage points in household consumption rate from 2000 to 2008, which accounts for 30.8 percent of the total drop in household consumption rate during that period.

Market Transition and Income Inequality in Urban China： Evidence from Shapley Value Decomposition

China＇s market-oriented reform is expected to strengthen the role of the market in allocating resources, which raises concerns over the impact of market transformation on income distribution and earnings inequality in the past decades. This paper decomposes the sources of inequality based on the newly developed Shapley value approach and examines the contributions of the market, along with other nonmarket factors, to total inequality. Using the China Health and Nutrition Survey data over the period 1989-2009, we find that the income gap between laborers with a higher level of education and those with a lower level has widened since the transformational reforms of the economy. Our results suggest that the largest contribution of changes in income inequality can be attributed to the increase in returns to education, while the relative contributions of the household registration （hukou） system, type of sector ownership, geographic location, and gender to inequality experienced a downward trend between 1989 and 2009. The authors argue that rising income inequality is the consequence of efficiency improvements and an imperfect economic system, and that the market is a decisive force in economic development as it releases competitive signals and creates incentive mechanisms for innovation. Creating a more efficient labor market and increasing investment in human capital, particularly equalizing educational opportunities and improving the quality of education in lagging rural and inland regions to disadvantaged groups, are significant for an equitable distribution of income and sustainable development in the long run.

The effects of FDI inflows on income inequality:Evidence from OECD countries

Income inequality is a concerned topic that attracts academia studies for many reasons.Among the long list of factors offered by scholars that contribute to income inequality,the impact of globalization has been extensively studies.This study uses a three-step analysis to examine the influence of Foreign Direct Investment(FDI)inflows on income distribution for Organization for Economic Cooperation(OECD)countries through panel data analysis techniques.FDI flows into OECD countries are generally driven by high skilled works.FDI inflows to OECD countries increase GINI coefficients and widen income gaps due to their skill-intensive nature.A high level of education should be encouraged as indicated by its negative relationship with the GINI index.