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Technical change and income inequality in China
Author(s) -
Zhang Xun,
Wan Guanghua,
Wang Chen,
Luo Zhi
Publication year - 2017
Publication title -
the world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/twec.12531
Subject(s) - gini coefficient , economics , technical change , economic inequality , inequality , income inequality metrics , china , income distribution , panel data , demographic economics , labour economics , econometrics , macroeconomics , mathematics , productivity , geography , mathematical analysis , archaeology
The purpose of this paper was to explore the inequality–technical change relationship. Different from earlier studies, we aim to gauge the impact of technical change on the overall inequality, not just a particular component of inequality. This is achieved by establishing that the labour share of income is negatively correlated with overall inequality as indicated by the popular Gini coefficient and by modelling the labour share of income as a function of technical change. The empirical model of labour share of income is estimated using 1978–2012 provincial panel data from China. The main estimation results show that technical change in China had been mostly capital‐biased. It contributed to the successive reductions in China's labour share of income and thus rapid rises in income inequality.