Inter-provincial Disparities in Rural ‘People's Livelihood’ in China

Abstract

This article presents an empirical study of the evolution of income disparities in rural China across 24 provinces for 1980–2004. Provincial data on rural net incomes, rural living expenditures and rural expenditures on food are used to study the trends in inter-provincial disparities. Direct statistical measures of dispersion estimated from this data and adjusted for price differentials across provinces and across time, reveal an uneven but sustained increase in inter-provincial rural inequalities. With rural economic growth positively associated with overall provincial growth in the entire period as well as most sub-periods, the gaps in per capita incomes as well as consumption expenditure including expenditures on food across provinces have widened. Divergences across provinces, however, are fewer and show tendencies of reduction during phases of income growth. The findings, placed against the background of the large literature on the subject of inequality in China, provide support to the view that the implications of sustained increases in inequality could not only effect future economic growth but prove to be destabilising as well.

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