An analysis of income polarization in rural and urban China

The purpose of this article is to contribute to the analysis of Chinese income inequality by focusing more specifically on income polarization, which captures both alienation (i.e. heterogeneity between income groups) and identification (i.e. homogeneity within groups). The empirical investigations conducted as part of this research are based on the China Health and Nutrition Survey data from 1989 to 2006 and indicate that Chinese household income is strongly polarized. After a period of stagnation between 1989 and 1997, the degree of polarization increased significantly between 1997 and 2006, indicating the constitution of identified groups in middle and upper income ranges. Although the level of income polarization is higher in rural areas, the increase in polarization is far more conspicuous in urban areas, suggesting that the risk of social tensions is more pregnant in Chinese cities. The analysis of the sources of income polarization in rural areas shows that the increase in polarization is closely linked to non agricultural opportunities. In urban areas, the emergence of identified groups in middle and upper income classes can be explained both by the sharp decline in subsidies and by the liberalization of the urban labor market and state enterprises.inequality, polarization, kernel density, China

Measuring polarization, inequality, welfare and poverty

This paper analyzes the relationship between polarization and inequality, welfare and poverty measures. First, the Wolfson polarization measure is generalized in terms of the between-groups and within-groups Gini components for income groups separated by any z income value. Second, it is shown that polarization is the difference between the welfare levels of rich and poor income groups when feelings of identification between individuals are based on their utility functions. Third, the proposed polarization measure is a function of the Sen poverty index, its extension due to Shorrocks (1995) and the normalized poverty deficit index when the z income value represents the poverty line. In addition, these results are linked to the Esteban and Ray (1994) and Esteban et al. (1999) polarization measures.polarization, inequality, welfare, poverty.

Is income becoming more polarized Italy? A closer look with a distributional approach

During the 1990’s and the early 2000’s income inequality in Italy shows levels higher than many other OECD countries, not displaying any significant trend, upward or downward. This evidence relies essentially on summary measures of inequality, which may not capture aspects of the whole income probability density, such as multi-modalities and polarization. This paper applies a non-parametric tool, the “relative distribution”, to describe patterns of changes on the entire Italian household income distribution over the period 1989–2006. Furthermore, this approach also allows us to decompose the relative density into changes in location and changes in shape, in order to emphasize whether income distribution becomes more polarized or exhibits patterns of convergence toward middle income classes. A similar decomposition enables us to analyze the impact of selected covariates on income distribution. During the period Italy experienced a significant increase of household income polarization, which has particularly affected incomes below the median. In addition, this relative polarization is mainly correlated to changes in the returns to household-head occupational status.Income distribution, Relative Distribution, Polarization

Measuring polarization via poverty and affluence

The decline of the middle class has been investigated as a principal aspect of social polarization (Wolfson 1994, 1997). Wang and Tsui 2000 have characterized a class of polarization measures by postulates on normalization, increasing spread and increasing bipolarity. The present paper generalizes this class of measures. It defines polarization by aggregating measures of poverty and of affluence, focussing on incomes outside a middle class interval. The approach is applied to German data on income distribution. --decline of middle class,income distribution,income richness

On the Decomposition of Polarization Indices: Illustrations with Chinese and Nigerian Household Surveys

This paper explores the link between polarization and inequality and proposes some analytical methods to decompose the Duclos, Esteban, and Ray (2004) polarization index by population groups or income sources. In some cases, the decomposition methods were extend to the Esteban and Ray (1994) one. The main aim of these decomposition methods is to extend the interpretation derived from polarization indices to that of contribution components. Results drawn from Chinese data conclude that even if inequality has increased sharply during the last two decades, the pure polarization component was remained constant or even decreased on average. On the other hand, results from the 2004 Nigerian survey conclude that the population is spatially polarized, and this, based on geo-ecological zones. Furthermore, the two income sources, namely, Employment income and Non farm business income, significantly contribute to total polarization.Polarization, Equity, Inequality, Decomposition

Income distribution and income sources in Uruguay

This paper is concerned with changes in the distribution of income sources in Uruguay after the late eighties. An apparent stability in the distribution of total incomes is hiding deep transformations affecting the generation of that income. The distribution across all income earners at the end of the eighties exhibited two well-distinguished poles, each associated with one of the main income sources: pension benefits and wages. This bimodality diminished during the nineties due to the reduction in polarization by income sources. In the same period we find that in the case of labor earnings there was a net transfer of population mass from the middle of the distribution to both extremes, which results in an increasing polarization within this income source. This phenomenon resembles the Anglo-Saxon experience of the shrinking middle class.income sources, inequality, labor market, pension benefits, polarization

Imperfect Information and the Meltzer-Richard Hypothesis

Despite a strong theoretical prediction that income skewness and redistribution should be positively linked, empirical evidence on this issue is mixed. This paper argues that it is important to distinguish between sources of changes in income skewness. Two sources of such changes are discussed: rising polarization and upward mobility, which both increase income skewness. Under imperfect information, these developments affect redistribution in different ways. While rising polarization increases redistribution, upward mobility can have the opposite effect. Reasonable degrees of informational imperfection are sufficient to generate increasing income skewness and decreasing redistribution in the presence of upward mobility.Voting; redistribution; imperfect information

Testing a global city hypothesis : an assessment of polarization across US cities

Social polarization is perhaps most evident within the world's large cities where we can easily observe stark contrasts between wealth and poverty. A world city theoretical perspective has emerged that associates large cities importance in a global network of cities to the degree of internal polarization within these cities. The research reported here locates 57 large US cities within this world city hierarchy and then empirically examines the hypothesized positive association between global centrality and social polarization using a multivariate, cross-city analysis. The findings are mixed, with some evidence that global centrality increases income polarization, but only in the context of higher levels of immigration. There is no evidence that a city's centrality affects occupational polarization. We conclude by suggesting implications for the world city literature and future research

the middle class consensus and economic development

Modern political economy stresses"society's polarization"as a determinant of development outcomes. Among the most common dorms of social conflict are class polarization, and ethnic polarization. A middle class consensus is defined as a high share of income for the middle class and a low degree of ethnic polarization. A middle class consensus distinguishes development successes from failures. A theoretical model shows how groups - distinguished by class or ethnicity - will under-invest in human capital and infrastructure when there is"leakage"to another group. The author links the existence of a middle class consensus to exogenous country characteristics, such as resource endowments, along the lines of the provocative thesis of Engerman and Sokoloff (1997), that tropical commodity exporters are more unequal than other societies. The author confirms this hypothesis with cross-country data. This makes it possible to use resource endowments as instruments for inequality. A higher share of income for the middle class and lower ethnic polarization, are empirically associated with higher income, higher growth, more education, better health, better infrastructure, better economic policies, less political instability, less civil war (putting ethnic minorities at risk), more social"modernization,"and more democracy.Economic Theory&Research,Decentralization,Gender and Social Development,Environmental Economics&Policies,Labor Policies,Achieving Shared Growth,Governance Indicators,Economic Development,Inequality,Economic Theory&Research

Income distribution in Romania

The paper presents the main results of a study on income distribution during 1995-2008 years, which central concern is the measurement of income inequality and polarization in Romania. A set of indices (S80/S20, Gini, Atkinson and Theil, for inequality; Foster-Wolfson, Milanovic, Wang-Tsui, Esteban-Ray and Esteban-Gradin-Ray, for polarization), have been estimated in order to get a complex and robust evaluation of these two characteristics of the income distribution. Estimates, based on data collected by Household Budget Surveys, are showing an increase in inequality and polarization, mainly since 2000 year.disposable income, overall inequality, between-group inequality, bipolarization, group polarization