This is less than half of the difference in China. For the U.S., we look at Zillow’s median house listing price by state for a mix of new and existing homes by state. As compared with 390,000 newly added jobs in February, the central government created around one million urban jobs on a monthly basis, according to Xinhua. The Hong Kong government might want to consider diversifying its economy by using part of the savings earmarked for rainy days. Income inequality among individuals is measured here by five indicators. In rural areas, it has even widened. Home prices in the most expensive city, Shanghai, are nearly nine times greater than in the least expensive province, Shaanxi. Dabla-Norris, Era; Kochhar, Kalpana; Suphaphiphat, Nujin; Ricka, Frantisek; and Tsounta, Evridiki. 1, 2013. The WSJ did try to find some figures but only ended with questioning the Gini Coefficient's accuracy that suggests a contrasting conclusion. Measuring income inequality has long been a key focus in welfare economics. When looking at regional income data, the relative difference between wealthiest regions and the poorest will not be nearly as large. Although it may not account for most of consumption, it is the most important component of spending. The reforms were implemented progressively, from special economic zones in coastal cities toward inland provincial regions, and in sectoral waves. Economic Research Journal, No. The Gini coefficient ranges from 0 (0%) to 1 (100%), with 0 representing perfect equality and 1 representing perfect inequality. The Gini of cross-regional income per capita is 0.19. We calculate the Gini coefficient for each country using each region’s per capita disposable income to measure income inequality. The Chart of the Week tells the story. High on the body’s agenda will be sketching out a new official five-year plan for Asia’s largest economy. However, solely looking at income tells only part of the story about the difference in people’s living standards because income does not reveal information about the cost of living. Notice that cross-country comparison is meaningful in our context only if we use nominal housing prices instead of a housing price index. He joined the St. Louis Fed in 2005. Their results suggest that, relative to total bank credit, an increase in the raised capital from the stock market reduces income inequality, whereas a rise of turnover in the stock market augments income inequality. So alternatively we could use the absolute rental cost in each region to adjust regional average disposable income to capture the renter population’s inequality. 4, 2008. Regional inequality is substantially less severe in the US than in China when considering only disposable income, but when accounting for housing prices, the degree of inequality among China’s provinces improves. The reason people can tolerate this inequality is that they hope and expect that this disparity will fall at one day or another. That means China's Gini coefficient (0.481) belongs to a handful of countries with top inequality in the world, not only higher than that of western developed countries, but also above Asia's … The breakdown of Gini coefficient differences, in particular, facilitates a better estimate of how each income source contributed to the decrease in the Gini coefficient. Housing prices are unequal across regions in both China and the U.S., but the disparity is greater in China. In addition, "the Chinese government, contrary to the WSJ's allegation, has rolled out a series of measures to add jobs," Liu noted. The living standard is about 4.5 times greater in Indiana than in Hawaii. Journal of Financial Research, No. Differences in incomes between urban and rural areas another major factor. The poorest state is Mississippi, with per capita income of around $32,000. Take e-commerce as an example. A value of 1 indicates maximum inequality, while a value of 0 means perfect equality. We’ll email you when a new Regional Economist article is published. If Donald Trump loses the United States presidential election in November, he will ultimately be seen to have left little mark in many areas. China’s economic growth has improved overall prosperity, but Chinese women have benefited less from these gains. The Gini of cross-regional income per capita is 0.19. As the graph below shows, over the past 25 years this indicator reached a maximum value of 43.70 in 2010 and a minimum value of 32.20 in 1990. "Although traditional industries including tourism, retailing, and manufacturing, took a pounding in the pandemic, the crisis provides momentum to new business and entrepreneurship," Liu said. Economic Science Press, 2002. More than two decades of spectacular economic growth in China have raised incomes dramatically and lifted millions of people out of poverty. The maximum threshold for the 20% bracket was nearly tripled from $16,000 to $45,000 per year. and it represented about 33 percent of household expenditure in the U.S. in 2016.This is based on authors’ calculations using consumption expenditure data from the Bureau of Labor Statistics. First, we look at per capita disposable income by province and the municipalities of Beijing and Shanghai for China (excluding Hong Kong and Taiwan). One caveat is that not everyone is a homeowner. The pandemic "is widening the gap between haves and have-nots in China, a trend that could bring social tensions and undermine the country's stronger-than-expected economic recovery," the Wall Street Journal (WSJ) said in its recent article. See BLS. Apart from injecting vitality to the Chinese economy, e-commerce turns out effective in narrowing, not widening, the income gap in China. Central Banker: News from the St. Louis Fed, In Plain English: Making Sense of the Federal Reserve, Economics and Personal Finance Glossary and Flashcards, Materials and Videos from Featured Events, Center for Household Financial Stability HOME, Tipping Points: Household Debt Research Symposia, Manuals, Regulations, Laws & Other Guidance, Read more about the author and his research, In Plain English - Making Sense of the Federal Reserve, 2015 Regional Per Capita Disposable Income. With an increasing number of consumers turning to online shopping for daily necessities, those having been laid off in the crisis found their job opportunities. China Securities Depository and Clearing Company Limited, https://doi.org/10.1007/978-981-10-8357-0_3, Political Science and International Studies, Political Science and International Studies (R0). The daily column clarifies emerging issues and better defines the news agenda, offering a Chinese perspective on the latest global events. The highest regional income per capita is four times greater than the poorest. 6, 2008. For US states, this measure of inequality worsens (see Table below). However, if this disparity does not narrow, there comes a point when people will no longer endure it. Rapid modernisation has enabled China to provide its citizens with improved living standards and increased economic opportunities. In this article, we look at regional per capita disposable income data for China, a developing nation, and the U.S., an advanced economy, to see how income inequality compares between two large countries with a substantial income gap. Social Science Research, No. For US states, this measure of inequality worsens (see Table below). The cross-regional average of per capita disposable income is about 22,000 yuan, and the cross-regional median of per capita disposable income is about 18,600 yuan. Yet the cost of living is not equal across regions, especially with respect to nontradable and nonmobile consumption goods such as housing. By decomposing the Gini coefficient and the Gini coefficient differences by income source, this chapter tries to explore the reasons why the Gini coefficient has been falling in recent years in China. By contrast, Russia opted for a “big-bang” transition after the fall of the Soviet Union in 1990-1991, with a rapid transfer of public assets to the private sector and the hasty introduction of free-market economic principles. Rules around social security contributions are also regressive. When looking at regional income data, the relative difference between wealthiest regions and the poorest will not be nearly as large. This is based on authors’ calculation using consumption expenditure data from the National Bureau of Statistics of China. The Gini coefficient is based on the comparison of cumulative proportions of the population against cumulative proportions of income they receive, and it ranges between 0 in the case of perfect equality and 1 in the case of perfect inequality. Read more about the author and his research. Income tends to be concentrated along the rapidly developing eastern coast, especially in the municipalities of Beijing and Shanghai. Filip Novokmet, Thomas Piketty, Li Yang and Gabriel Zucman compare recent findings on private and public wealth accumulation in China and Russia in their transition from communism to a more capitalist-oriented economic system, and discuss the impact of the different privatisation strategies followed in the two countries on income inequality.

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