Social Welfare Comparison Of The Trend Of Urban Residents' Income Distribution In China

China has achieved high economic growth after the reform and opening and people's overall living standard has improved greatly, but at the same time, residents' income disparity is constantly increasing. Now, the widening of residents' income disparity has influenced the economic growth as well as social stability. And in some sense it has become the factor that restricts further reform and development of our country. Therefore, it is necessary for us to study the problem of income distribution of urban residents in each region to eliminate the negative impact on economic growth and social stability caused by the huge income disparity. The study has great significance on the well-going of the reform and opening progress and the construction of the harmonious society.Ever since Atkinson proposed the theorem of social welfare comparison of income distribution in 1970, many studies have been done on the methods of social welfare comparison of income distribution. A series of principles and approaches have been proposed, such as the Sen Index and Shorrocks theorem. And recently, numerous empirical studies have been made in western academy of economics and many interesting results have been emerged.The problems of income distribution of our country have also caused the extensive attention of many economists in our country. But most of the studies at present focus on the test of convergence of the inner-regional economic growth level. Many researches show that there exists a reverse relationship between inner-provincial residents' income disparity and national income per cap or gross domestic product per cap. That is, with the reduction of the difference in inner-provincial national income per cap or gross domestic product, the difference of residents' household income per cap is increasing. But these researches have not paid much attention to the inequality within the region, which leads to the bias of the estimation results. We can measure the trends of residents' income distribution more accurately by using the approaches of social welfare comparison. But there are not many relevant researches at present. By using the data of regional nominal income of 22 provinces between 1995 and 2004, we estimate the corresponding real income and the gini coefficient which measures the level of income distribution inequality. And then by using the formulas of social welfare level proposed by Sen(1976), S=Y(1-G), we calculate the corresponding social welfare index which takes into consideration both the income level(efficiency) and income inequality(equality). By using the social welfare index as the measure of urban residents' income distribution conditions and statistical description methods as well panel data model, we study the trends of urban residents' income distribution.We divide our country into three regions: eastern, central and western region. And we study the changing of urban residents' income distribution. Between 1995 and 2004, the ranking of only three provinces' real income per cap have changed in ten years. The urban residents' income per cap of all other provinces has been basically increasing. The gini coefficients of only Guangdong and Jiangsu in eastern regions have changed significantly. And the urban gini coefficients of all other provinces have been increasing slowly and have also showed convergence. The social welfare indexes of eight provinces in eastern region have been constantly increasing. The differences of urban residents' real income of seven provinces in central region are not very big and the rates of increasing tend to converge to the same value. The differences of social welfare between provinces in central region and eastern coastal region are very big. In 2004, Shanghai has the highest level of social welfare index in eastern region, 11279.8. It is one point eight times of the social welfare index of Hunan, which has the highest social welfare index in central region. Although the inner-region differences is very big, the differences of inner-provincial urban residents' social welfare are not very big, probably due to the similarities in geography conditions, natural resources and economic policies etc.The urban residents' social welfare indexes of seven provinces in central region have been constantly increasing at approximately the same rate and since 2002, the welfare indexes of each province have been increasing cross-overly. Similarities of urban residents'real income exist between provinces in central region and western region. The urban residents' real income in western region has also been increasing constantly but the change of increasing rate is not very big across years. The changing of gini coefficient of provinces in western region is not very big, but it also signifies the trend of increasing. The social welfares of seven provinces in western region have changed diversely and the increasing trends have been cross-overly.The results of general statistical analysis indicate that: (1) although there are differences in urban residents' income per cap in every regions (eastern region has the biggest difference), with the increase of urban residents' real income in every region, the differences have been reducing within the region and converging among regions; (2) the gini coefficients which measure the urban residents' income disparity in each region have been increasing at the beginning and then reducing. And the gini coefficients within each region show the trend of convergence; (3) the social welfare level of urban residents in each region is approximately the same and has showed the trend of increasing, which indicates that the increasing of urban residents' real income can compensate the widening of income inequality.By using the real income per cap in eastern, central and western region between 1995 and 2004 and based on the calculation of social welfare indexes of urban residents, we test the sigma convergence, the absolute beta convergence and conditional beta convergence. At the same time, we make theoretical analysis of the estimation results. The analysis results indicate that: (1) the sigma convergence of eastern region is not obvious. Sigma convergence exists in central and western region. Because the income disparity within eastern region is much larger than the income disparity within central and western region, the real income of the country as a whole does not show sigma convergence. The tests of absolute beta convergence show that the eastern, central and western region shows different trends: the central region shows the trend of divergence, the western region shows the trend of convergence and the western region does not show any obvious trend. The tests of conditional beta convergence indicate that the real income levels of eastern, central, western region and the country as a whole show obvious trend of convergence. (2) The changing of social welfare of the eastern, central and western region is not the same. The welfare indexes in eastern and western region show obvious trends of convergence; the social welfare index of central region does not change significantly. Driven by eastern and western region, the welfare index of the whole country shows obvious trend of conditional convergence. The reason why the urban residents' social welfare shows the trend of conditional convergence is that the urban residents' income has showed obvious trend of conditional convergence and at the same time, the increase of urban residents' income can compensate the slight increase of income inequality.