An Analysis On The Reasons Of Household Income Inequality

Since the 1978's Reform and Opening, China's economic structures have changed dramatically. The broadening of income inequality among the residents has become one of the most serious problems during the process of economic transformation. This thesis is mainly an empirical study on the basic economic characteristics and income patterns of households from a micro perspective. A large sample dataset is applied, which comes from the 1993, 1997, 2000, 2004, and 2006's China Health and Nutrition Survey.Descriptive statistical methods are frequently used in the induction of households'economic characteristics and comparisons are made between the urban, suburban, town, and village households with respect to education, occupation, and health. A relationship between the household economic characteristics and income patterns is built by the decomposition of inequality indicators. Oaxaca decomposition of inequality based on the regression functions reveals more implicit information about the reasons of income inequality.The main conclusions are as follows. Firstly, households'economic characteristics and income patterns vary explicitly among different geographical regions. Wages are the most important income sources of urban, suburban, as well as town residents, while the village households depend on operational incomes. The dramatic difference between town and village calls for a proper categorization between"urban"and"rural"households. Secondly, household incomes are influenced by both the macro level factors, such as growth and social inequality, and the micro level factors, including occupation, education, health, and medical insurance. A more stable occupation or a higher education level may play positive role in the promotion of household income level. Unfortunately, transitional income has little to do with the social injustice according to the empirical analysis. Finally, by reclassification of objectives, the within-group difference becomes less influential to the total inequality and nearly half of the total household income inequality can be explained by between-group difference. There is also enough evidence for the existence of huge gaps among households within the traditional"rural"area.