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Does Inequality Matter in China?

Does Inequality Matter in China?. Lina Song University of Nottingham. Outline. How unequal is China? Is income inequality a very serious problem? To what extent does inequality matter?. China gini coefficients over time. 1988 1995 2002 China 39.5 46.9 46.8 45.2 45.0

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Does Inequality Matter in China?

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  1. Does Inequality Matter in China? Lina Song University of Nottingham

  2. Outline • How unequal is China? • Is income inequality a very serious problem? • To what extent does inequality matter?

  3. China gini coefficients over time 1988 1995 2002 China 39.5 46.9 46.8 45.2 45.0 with Migrants 44.8 Rural 32.5 36.4 36.5 Urban 24.4 33.9 32.2 Source: CHIP (Gustafsson et al, 2007)

  4. 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

  5. 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

  6. 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

  7. 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) ]

  8. Data The 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.

  9. Regression of overall satisfaction on satisfaction with specific aspects of life

  10. 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

  11. 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.

  12. 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?

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