Chapter

Risk and the Evolution of Inequality in China in an Era of Globalization

Ethan Ligon

in Globalization and Poverty

Published by University of Chicago Press

Published in print April 2007 | ISBN: 9780226317946
Published online February 2013 | e-ISBN: 9780226318004 | DOI: http://dx.doi.org/10.7208/chicago/9780226318004.003.0015
Risk and the Evolution of Inequality in China in an Era of Globalization

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This chapter discusses the consequence of globalization on household welfare in China. It also uses evidence on changes in the cross-sectional distribution of consumption to draw inferences about the welfare of households. The estimated model predicts that inequality will continue to increase in China through 2025, but at a relatively slow rate. The risk borne by households depends much more on households' resources than it does on the year—even though there are enormous changes in China's aggregate economy over this period, idiosyncratic risk is much more important than any aggregate shock in determining household welfare and in determining the evolution of inequality over time. The estimates of the law of motion governing the Lorenz curves for urban China permit the predictions about future consumption inequality.

Keywords: globalization; household welfare; China; estimated model; economy; consumption inequality; Lorenz curves

Chapter.  10981 words.  Illustrated.

Subjects: Economic Development and Growth

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