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China’s economic development in recent decades has been tremendous, butsubject to debate. This paper calculates regional prices that make incomes comparableacross both time and space using the Engel-curve approach. Incomesare adjusted using these price indices, providing new estimates of inequality andpoverty development. Our findings contrast with measures based on the officialconsumer price indices (CPIs) – in a time characterized by high economic growth,we find a larger increase in inequality and a more moderate poverty reduction thanwhat is indicated by the CPI-adjusted measures

The Cost of Living in China: Implications for Inequality and Poverty