My dissertation consists of three essays on income inequality in China.
The first essay provides new Gini index estimates of income inequality in China 2012, 2014, and 2016, which are obtained by applying an enhanced semi-parametric Lorenz curve method to the data from the China Household Finance Survey (CHFS). My estimations that account for top income earners show that the level of Gini index in China exceeded 0.6, which is significantly higher than the estimates based entirely on household sampling data. My results imply that it is not useful to compare income inequality estimates obtained by applying these two distinct measurement approaches.
In the second essay, I perform a novel empirical analysis of income inequality in China at the provincial level. I find that an important factor in the regional disparity lies in the “prices” and “quantities” of human capital across provinces and that poor provinces face higher income and educational inequality, and a lower average level of education. I conclude that the reduction of existing inter-provincial human capital gaps and the acceleration of labor markets' integration could substantially contribute to the reduction of existing income disparities across Chinese provinces.
In the third essay, I extend the Bergstrom et al. (1986) model of voluntary provision of public goods, where individuals also care about income mobility while deciding on their contribution towards public goods. I claim that a higher degree of mobility scales up the individual identification with the society and raises the level of contributions to public goods. To support my theoretical predictions, I use the data from China Household Finance Survey (CHFS) to estimate income mobility in China in 2014 and 2016. My empirical results suggest that a narrower gap between individual and mean permanent income and a higher level of provincial mobility per se, strengthen a willingness to pay for environmental protection.