Title: A New Episode of Increased Urban Income Inequality in China
Abstract: The development of income inequality in urban China is a hot topic. There is agreement that income inequality has tended to increase over the years, but evidence indicates that the development has not been smooth. For example, previous studies based on the China Household Income Project (CHIP) have found that earnings inequality at the individual level as well as income inequality at the household level in urban China increased profoundly from 1988 to 1995. However, although from 1995 to 2002 earnings inequality continued to increase, income inequality at the household level decreased modestly (Gustafsson, Li, and Sicular 2008). Rapid growth in incomes caused urban poverty, assessed by a poverty line representing constant purchasing power ("absolute poverty"), to diminish rather substantially (Appleton, Song, and Xia 2010). What has happened more recently, during the initial phase of the Hu Jintao–Wen Jiabao leadership (2002–2007)? In this chapter we aim to shed new light on developments during this period using data from the CHIP urban household survey.