Working Paper
The long-term evolution of income inequality and poverty in China

By using the five waves of the China Household Income Project surveys conducted during 1988–2013, this paper investigates long-term changes in income inequality and poverty in China.

Income inequality rose before 2007 and then fell by a small amount. The main reason for the rise in income inequality was that high-income percentiles had faster income growth than lower percentiles; the fall in income inequality implies faster income growth among low-income percentiles.

The paper also indicates a considerable poverty reduction during China’s economic transition, mainly because of the growth effect of poverty decomposition.