Description: Did Higher Inequality Impede Growth in Rural China?

Did Higher Inequality Impede Growth in Rural China?

This paper estimates the relationship between initial village inequality and subsequent household income growth for a large sample of households in rural China. Using a rich longitudinal survey spanning the years 1987-2002, and controlling for an a...

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Bibliographic Details
Main Authors:	Benjamin, Dwayne, Brandt, Loren, Giles, John
Language:	English
Published:	2012
Subjects:	ACCOUNTABILITY ADVERSE EFFECTS ADVERSE IMPACT AGRICULTURAL SECTOR ANNUAL GROWTH ANNUAL GROWTH RATE ASSET DISTRIBUTION AVERAGE ANNUAL AVERAGE GROWTH AVERAGE INCOMES BANK BIAS BIASES CAPITAL ACCUMULATION COLONIAL LAND CONSUMER PRICE INDEX CONSUMPTION CONSUMPTION GROWTH COOPERATIVES CORRUPTION CREDIT CREDIT MARKET CREDIT MARKET CONSTRAINTS CREDIT MARKETS CROSS-COUNTRY DATA CROSS-COUNTRY INEQUALITY DATA SET DATA SETS DEPENDENT VARIABLE DEVELOPMENT ECONOMICS DIFFERENTIAL PATHS DISTRIBUTION OF LAND DISTRIBUTIVE POLITICS DYNAMIC PANEL ECONOMETRIC ANALYSIS ECONOMETRIC ISSUES ECONOMETRICS ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC OPPORTUNITIES ECONOMIC OPPORTUNITY ECONOMIC PERFORMANCE ECONOMIC POLICY ECONOMIC REFORM ECONOMIC REFORMS ECONOMIC REVIEW ECONOMIC SHOCKS ECONOMIC STUDIES EDUCATIONAL ATTAINMENT EDUCATIONAL OPPORTUNITIES EMPIRICAL ANALYSIS EMPIRICAL PROBLEMS EMPIRICAL RESULTS EMPIRICAL WORK EMPLOYMENT GUARANTEE SCHEME EMPLOYMENT OPPORTUNITIES EMPOWERMENT ENDOWMENT ENDOWMENTS ENTERPRISES EQUAL OPPORTUNITY EXCLUSION EXPENDITURE EXPENDITURES EXPLANATORY VARIABLES FACTOR ENDOWMENTS FAMILY FAMILY BUSINESSES FARM ACTIVITY FARM EMPLOYMENT FARM EMPLOYMENT OPPORTUNITIES FARM OUTPUT FEE FEES FINANCIAL CRISIS FINANCIAL SUPPORT FOREIGN LANGUAGES FORMAL SOURCES OF CREDITS FUNCTIONAL FORM GINI COEFFICIENT GROUP MEANS GROWTH EQUATION GROWTH LITERATURE GROWTH RATE GROWTH RATES GROWTH THEORIES GROWTH-INEQUALITY RELATIONSHIP GUARANTEE GUARANTEE SCHEME HETEROGENEOUS COMMUNITIES HIGH INEQUALITY HIGHER INEQUALITY HOUSEHOLD HOUSEHOLD ACCESS HOUSEHOLD CONSUMPTION HOUSEHOLD HEAD HOUSEHOLD INCOME HOUSEHOLD INCOMES HOUSEHOLD MEMBERS HOUSEHOLD PARTICIPATION HOUSEHOLD PER CAPITA INCOME HOUSEHOLD SIZE HOUSEHOLD SURVEY HOUSEHOLD SURVEYS HOUSEHOLDS HUMAN CAPITAL HUMAN DEVELOPMENT IMPACT OF INEQUALITY IMPERFECT CREDIT INCOME DISTRIBUTION INCOME GROWTH INCOME INEQUALITY INCOME VARIABLES INDICATORS INEQUALITY INEQUALITY INDEX INEQUALITY MEASURE INEQUALITY MEASURES INEQUALITY-GROWTH RELATIONSHIP INSTRUMENTS INTEREST INTERNATIONAL BANK INVESTMENT JOB OPPORTUNITIES LABOR MARKETS LABOUR MARKETS LAND DISTRIBUTION LAND REFORM LINK BETWEEN INEQUALITY AND GROWTH LOG INCOME MACROECONOMIC IMPLICATIONS MACROECONOMICS MARKET CONSTRAINTS MARKET DEVELOPMENT MEAN INCOME MEAN INCOMES MEAN LOG DEVIATION MEASUREMENT ERROR MEASUREMENT PROBLEMS MEASURES OF POVERTY NEGATIVE EFFECT NEGATIVE GROWTH NEGATIVE RELATIONSHIP NET INCOME NEW MARKETS 0 HYPOTHESIS OUTCOMES PEOPLE PER CAPITA INCOME PER CAPITA INCOMES PHYSICAL CAPITAL POLICIES POLICY RESEARCH POLITICAL ECONOMY POLITICAL ECONOMY MODELS POLITICAL PARTICIPATION POOR POOR HOUSEHOLDS POST-REFORM POVERTY POVERTY DYNAMICS POVERTY REDUCTION PRIMARY EDUCATION PRODUCT PRODUCTIVITY GROWTH PROGRAMS PROPERTY PROPERTY RIGHTS PUBLIC ECONOMICS PUBLIC EDUCATION PUBLIC EXPENDITURE PUBLIC EXPENDITURES PUBLIC FINANCE PUBLIC GOODS PUBLIC INVESTMENTS PUBLIC POLICY REGRESSION RESULTS REVENUE RISING INEQUALITY RURAL RURAL CONSUMER RURAL ECONOMY RURAL EMPLOYMENT RURAL HOUSEHOLD RURAL HOUSEHOLDS RURAL INEQUALITY RURAL PUBLIC SAMPLING SCHOOL FINANCE SIGNIFICANT DIFFERENCES SIGNIFICANT EFFECT SIGNIFICANT NEGATIVE SMALL BUSINESSES SOURCES OF INCOME SURVEY DESIGN TARGETING TAXATION TRANSFERS VILLAGE VILLAGE LEADERS VILLAGES WAGES
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20101119093018 http://hdl.handle.net/10986/3964

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Summary:	This paper estimates the relationship between initial village inequality and subsequent household income growth for a large sample of households in rural China. Using a rich longitudinal survey spanning the years 1987-2002, and controlling for an array of household and village characteristics, the paper finds that households located in higher inequality villages experienced significantly lower income growth through the 1990s. However, local inequality s predictive power and effects are significantly diminished by the end of the sample. The paper exploits several advantages of the household-level data to explore hypotheses that shed light on the channels by which inequality affects growth. Biases due to aggregation and heterogeneity of returns to own-resources, previously suggested as candidate explanations for the relationship, are both ruled out. Instead, the evidence points to unobserved village institutions at the time of economic reforms that were associated with household access to higher income activities as the source of the link between inequality and growth. The empirical analysis addresses a number of pertinent econometric issues including measurement error and attrition, but underscores others that are likely to be intractable for all investigations of the inequality-growth relationship.

Did Higher Inequality Impede Growth in Rural China?

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