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By Organisation for Economic Co-Operation and Development

China has skilled astounding financial progress considering that 1978, averaging eight to nine% in keeping with 12 months. consequently, on commonplace, people's way of life is much better than ever sooner than in China's historical past. even though, monetary disparities have additionally widened very considerably in this interval, elevating questions on the appropriateness and sustainability of latest rules. This publication comprises the papers from a seminar held in Paris on 20-21 October 2003 to discover the reasons of China's transforming into monetary disparities. The seminar was once organised by means of the OECD and the nationwide improvement and Reform fee (NDRC) of China. The papers through chinese language and OECD specialists examine the riding forces at the back of those tendencies and talk about attainable coverage responses. the gathering provides many comparisons with source of revenue inequality developments in OECD international locations, together with geographic disparities, and appears at how one can enhance chinese language info on source of revenue distribution. This ebook is a part of the OECD's ongoing co-operation with non-member economies worldwide.

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These differences worked together, contributing to the income gap between the urban and the rural areas. Compared with the urban area, the countryside relies heavily on manual work, and the marginal productivity of labour is very low. Meanwhile, the rural population is growing fairly rapidly. Therefore, hidden unemployment is very common in rural areas. On the other hand, cities harbour industries with modern machinery, and labour productivity in urban areas is high. Urban industries can use cheap labour forces supplied by the countryside and this supply seems almost endless.

In the calculation of the national Gini coefficient, the index of a certain social group should be multiplied by the population share of that group. In the case of China, the dual economic structure results in different relative deprivation indexes in the urban and rural areas, since urban and rural residents have different reference systems. An overall relative deprivation index should be multiplied with the Gini coefficient, to show the overall deprivation acknowledged by all individuals. 5 (Liu Lei, 2002).

Causes of the formation of inequality The process of the formation of income distribution disparity in China was very complicated. Scholars analysed the causes from many aspects, including the effects of resource endowments, the historical heritage, economic structure, government policy, marketisation, ownership, the institutional system, the legislative system, individual differences, wealth accumulation, economic development, and so on. Scholars have developed varying interpretations of these factors, putting the emphasis on different causes.

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