American Economic Review Vol. 89 No. 2 1999
Markets and Inequality in Rural China: Parallels with the Past
Abstract
After 30 years of egalitarian rhetoric and collectivist practice, the introduction of market reforms to rural China entailed obvious risks for policymakers. Increases in average income might not compensate for the inequality generated by market-based income determination. Concern for this possibility may help explain the slow relaxation of administrative control over the allocation of resources like land. In order to evaluate the effect of market reforms, we could begin by comparing the current Gini coefficient to that which prevailed during the collective era (see Louis Putterman [1993] for early evidence). Yet, this might tell us little about the specific impact of market organization on income determination. Government policies, such as collective land ownership, mobility restrictions, and fertility limits cloud the picture. Furthermore, industrialization, though itself a product of the reforms, has changed the basis upon which individuals earn income. Isolating a pure effect of ‘‘market organization’’ is a difficult but important task since many current Chinese policies reflect an ambivalent attitude toward decentralized, market-based resource allocation. We offer a few suggestions on issues that need to be considered as this evaluation proceeds, by exploring current inequality in rural northeast China from the vantage point of the 1930’s. We begin with the observation that the level of inequality is similar in 1995 and 1935, and moreover, that most contemporary inequality exists within villages, as was the case in the 1930’s. We then focus on two institu-
- DOI
- 10.1257/aer.89.2.292
- Volume
- 89
- Issue
- 2
- Pages
- 292-295
- Language
- en
- Sources
- bibtex:phds-export.bib crossref openalex