does inequality matter in china? lina song university of nottingham
TRANSCRIPT
Does Inequality Matter in China?
Lina Song
University of Nottingham
Outline
(1) How unequal is China?
(2) Is income inequality a very serious problem?
(3) To what extent does inequality matter?
China gini coefficients over time
1988 1995 2002China 39.5 46.9 46.8
45.2 45.0with Migrants 44.8
Rural 32.5 36.4 36.5Urban 24.4 33.9 32.2
Source: CHIP (Gustafsson et al, 2007)
Comparison
• GDP (PPP) per capita:
- No. 87 of 181countries, $7198
• Human Development Index:
- No. 81 out of 177 countries, 0.768
• Gini coefficient:
- No. 92out of 126 countries, 44.7
S. Huntington (1968) "Political Order in Changing Societies", New Haven and London: Yale
University Press, P55
Social Mobilisation---------------------------------- = Social Frustration (1) Economic Development
Social Frustration-------------------------------- = Political Participation (2) Mobility Opportunities
Political Participation-------------------------------- = Political Instability (3)Political Institutionalisation
Reactions towards the “economic inequality” -
does inequality matter? • Alternative indicators to measure wellbeing
• Political instability
Regional Disparities - linked to regionalism
Industrial actions
Increasing crime rate
Social frustration -> discontent -> socio-political disorder
Testing hypothesis determining discontent
Social discontent =F [economic development, social mobilisation*,
absolute economic deprivation,relative deprivation (income inequality),political participation, community involvement (social capital),Inspirations / mobility opportunity,Adaptations to modernity) +
control factors: personality, health, personal characteristics, household, regional characteristics + error term (unobservable) ]
DataThe data used for this research were purposively
designed by the authors, administered by researchers at the Institute of Economics, Chinese Academy of Social Sciences, and conducted by the National Bureau and Statistics (Guannian, 2002).
The survey was linked to the 2002 Urban Household Income Distribution Survey (CHIP, 2002).
7000 individuals were randomly sampled from 71 Chinese cities out of 12 provinces covering all geographical regions and administrative levels of China.
Figure One: Scale of Life Satisfaction
1
3942
12
3
0
10
20
30
40
50
1 2 3 4 51=very satisfied, 2=satisfied, 3=not that
satisfied, 4=not satisfied, 5=very dissatisfied
% o
f S
atis
fact
ion
12
S10
20
40
60
80
% o
f s
ati
sfa
cti
on
1= satisfied, 2=not satisfied
Comparing Satisfaction and Dissatisfaction, Urban China, 2002
Regression of overall satisfaction on satisfaction with specific aspects of life
Satisfaction over the following aspects: coefficient T-statistics
Income:
Current household income 0.083 5.95 ***
Income compared with the people you know 0.075 5.78 ***
Income compared with what you earned before 0.157 10.48 ***
Occupation and social status:
Current occupation -0.008 -1.01
Current social status 0.049 4.35 ***
Career achievement/personal development 0.107 10.59 ***
Opportunities and social mobility:
Chances for job promotion 0.00005 -0.01
Chances for getting your talents /skills appreciated 0.088 9.75 ***
Opportunities for training -0.026 -3.65 ***
Job security -0.008 -0.92
Welfare provision:
Economic security in old age 0.016 2.28 ***
Current housing conditions 0.116 9.23 ***
Means of transportation 0.000 0.05
Government policies
General impact of state policies on your family 0.028 3.55 ***
Current price of basic foods 0.073 5.12 ***
Current price of basic daily needs (clothing and daily goods) 0.033 2.45 ***
Public infrastructure of the city 0.065 5.37 ***
Current level of pollution 0.0004 0.04
Family and social connections:
Social relations with others (guanxi) 0.022 2.7 ***
Family life, marriage and relationships 0.030 3.45 ***
Spouse’s current income -0.002 -0.18
Spouse’s current occupation -0.020 -2.04 ***
Spouse’s current social status 0.058 6 ***
Spouse’s current achievements 0.025 2.22 ***
Intercept 0.032 0.57
Adjusted R square 0.371
F-value 172.57
Number of Observations 6977
Modelling discontent / instability (testing key hypothesis)
Dependent variable: S = personal level of discontent;
Key variables to be tested: income growth; absolute income; unemployment + all observed variables
)2()()()Pr( 1 ijiji XXjS
ininiii uXbaS .*
Very satisfied
Satisfied
Not so satisfied
Not satisfied
Very dissatisfied
Baseline 0.6% 39.8% 46.8% 10.6% 2.3%
Not deprive (current income > past income) 0.6% 40.8% 46.3% 10.2% 2.1%
Deprive (current income < past income) 0.4% 36.4% 48.3% 12.1% 2.8%
Log (household income per capita) if doubled 0.9% 46.2% 43.3% 8.1% 1.5%
Currently employed 0.6% 40.0% 46.7% 10.5% 2.2%
Currently unemployed 0.3% 30.1% 50.2% 15.3% 4.2%
Type of medical Insurance:
Covered by state medical insurance 0.7% 41.8% 45.8% 9.8% 2.0%
Serious illness-coverage (self-paid by proportion) 0.5% 38.1% 47.6% 11.4% 2.5%
Commercial self-purchased medical insurance 0.4% 36.6% 48.2% 12.0% 2.8%
No medical insurance 0.3% 30.6% 50.1% 15.0% 4.0%
Very satisfied
Satisfied
Not so satisfied
Not satisfied
Very unsatisfied
Baseline 0.6% 39.8% 46.8% 10.6% 2.3%
Very satisfied Satisfied
Not so satisfied
Not satisfied
Very unsatisfied
Baseline 0.6% 39.8% 46.8% 10.6% 2.3%
Political participation and affiliation:
Not interested in political affairs 0.5% 37.9% 47.6% 11.4% 2.5%
Interested in politics affairs 0.8% 44.1% 44.5% 8.9% 1.7%
Communist Party/League members 0.7% 41.8% 45.8% 9.8% 2.0%
Other political Party members 0.5% 38.6% 47.3% 11.1% 2.4%
Not affiliated to any political Parties 0.5% 38.4% 47.4% 11.2% 2.5%
Summaryof Free House World Map
• Description: The Map of Freedom reflects the findings of Freedom House's 2006 survey Freedom in the World (PDF). Freedom in the World is an annual institutional effort that monitors the gains and losses for political rights and civil liberties in 192 nations and 18 related and disputed territories. For each country, the survey provides a concise report on political and human rights developments, along with ratings of political rights and civil liberties. Based on these ratings, countries are divided into three categories: Free (green), Partly Free (orange), and Not Free (red), as reflected in the Map of Freedom.
• In Free countries, citizens enjoy a high degree of political and civil freedom. Partly Free countries are characterized by some restrictions on political rights and civil liberties, often in a context of corruption, weak rule of law, ethnic strife, or civil war. In Not Free countries, the political process is tightly controlled and basic freedoms are denied.
Per Capi ta GDP and GINI Index byProvinces
0.15
0.2
0.25
0.3
0.35
0.4
0.45
0 5000 10000 15000 20000 25000 30000 35000 40000
Per Capi ta GDP (2003)
Gini
Ind
ex (
2001
)
山东
上海
北京
内蒙古
安徽
天津江苏
黑龙江
甘肃
海南
云南
浙江
青海
湖北
State Sector Employees and GINI Index by Provinces
0.15
0.2
0.25
0.3
0.35
0.4
0.45
0.2 0.25 0.3 0.35 0.4 0.45 0.5 0.55 0.6 0.65 0.7
% of State Sector Employees (2003)
GINI
200
1
内蒙古
陕西
浙江广东
海南
山东
上海
辽宁
新疆
江苏
黑龙江
重庆
西藏
河南
Ratio of Government Expendi ture and GINI Index byProvinces
0.15
0.2
0.25
0.3
0.35
0.4
0.45
0.05 0.1 0.15 0.2 0.25 0.3 0.35
Rati o of Government Expendi ture i n GDP 2003（ ）
GINI
2001
（）
青海宁夏
云南
浙江
河北
广东天津
北京
内蒙古
新疆
全国
Conclusion: does inequality matter?
• Absolute poverty(in relation to growth)
• Unjust - market segmentation, entitlement,
• Socio-political disorder
Why income inequality has become a primary issue now, not in 1995?