Income Inequality And Income Mobility Of Urban Residents And Rural Residents In China

Since the Reform and Opening in 1978, Chinese residents'income have increased significantly, meanwhile income inequality has become an increasingly important issue. How to understand and solve problems of income distribution has become the focus of the whole society. A large sample dataset is applied from China Health and Nutrition Survey, which includes 7 years:1989,1991,1993,1997,2000,2004 and 2006. Using this dataset, this paper analyzes household income inequality, income mobility and its impact on income inequality. So we can understand the current situation of China's income gap more comprehensively.This paper has four chapters. Chapter one introduces research background, significance, literature review and writing frameworks. Chapter two introduces some common measurement methods of income inequality and income mobility. By comparing the various methods, I select several methods to analyze income inequality, which are Gini coefficient, Theil index, income transition matrix, MF and MS indexes. Chapter three is the priority of this paper, which focuses on studying the Chinese urban and rural income inequality and mobility trends. Chapter four is another main section of this text, we analyze income inequality and mobility of factors. Chapter five makes a summary of the third part and puts forward some policy recommendations.There are four main conclusions of this article. Firstly, income inequality from1989 to 2008 was increasing, and income gap between the rural and the urban has increased in fluctuation. While the income gap in rural households was bigger than urban households. Secondly, it seems that income gap is primarily influenced by the wage income, and the contribution of wage income of urban residents is higher than which in rural residents. From the household characteristics, age, occupation, registered permanent residence, region, family size are influencing factors which are statistical significant. Thirdly, household income mobility can help reducing income inequality. Income mobility in the rural is above the urban, and the degree of income mobility was declining gradually. And income mobility of the whole households has the same trend. Lastly, non-agricultural income, education and family size are the main reasons which determine income mobility.