| This study contains two parts. In the first part various devices to rank income distrubution are discussed regarding their welfare implications, and a new device, the Modified Generalized Lorenz curve (MGL), is suggested. The properies of MGL ranking, in terms of the social welfare function corresponding to MGL, and the conditions for MGL dominance are proved. The MGL ranking takes into account the society's preference on equity and efficiency, and the trade-off relationship between them. A parameter ;The second part of the study is an empirical examination and evaluation of changes in the income distributions of the Mainland China, Taiwan and Hong Kong in the 1980s. Lorenz curves are estimated, and Generalized Lorenz curves (GL), Modified Generalized Lorenz curves are calculated for these three economies. Based on these estimates, rankings by GL, MGL, and other devices are obtained to show the changes in welfare level. For Mainland China, inequality had kept increasing during the whole period, but in the early stage of economic reform (up to 1984) increase in mean income had been more than compensated the worsening of inequality. In the late 1980s, there was no steady improvement in welfare level due to insufficient increase in mean income. For Taiwan and Hong Kong, mean incomes had increased at high rates, and inequality had not significantly increased or even decreased. So rankings by the same devices show a steady improvement over years. |
