Social Benefits in Urban China: Determinants and Impact on Income Inequality in 1988 and 2002

The growing income inequality in China since the economic reforms has attracted considerable attention. Official statistics show that China’s Gini coefficient rose from 0.33 in 1980 to 0.40 in 1994 and to 0.46 in 2000 (Chang 2002). Using the largest national household survey data conducted by the National Bureau of Statistics (NBS), Wu and Perloff (2004) find that the Gini coefficient of income increased from 0.31 in 1985 to 0.42 in 2001. This seems to conform with the Kuznets curve, in that economic growth and development are initially associated with increasing inequality.1