Income Inequality Between Chinese Regions: Newfound Harmony or Continued Discord?

Reprint No. 2014:39

Author(s): Johan Lyhagen and Johanna RickneYear: 2014 Title: Empirical Economics Volume (No.): 47 (1) Pages: 93–110
Online article (restrictions may apply)
Preliminary version

This paper develops an improved test of economic convergence or divergence using time series methods by introducing nonlinear trends in the form of logarithmic trend functions into the vector error correction model. The usefulness of the method is illustrated in an analysis of the growth pattern between Chinese regions in 1952–2007. Comparing all combinations of regional pairs, the analysis yields support for economic divergence in roughly half of the cases. In the other half, we instead find that regions have grown while maintaining stable income differences. As such, the results show the co-existence of divergence and conditional convergence among China’s regions.

Lyhagen, Johan and Johanna Rickne (2014), "Income Inequality Between Chinese Regions: Newfound Harmony or Continued Discord?". Empirical Economics 47(1), 93–110.

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