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Economic Inequality in Asia

Paper Session

Saturday, Jan. 4, 2020 2:30 PM - 4:30 PM

Manchester Grand Hyatt San Diego, Cove
Hosted By: American Committee on Asian Economic Studies
  • Chair: Calla Wiemer, American Committee on Asian Economic Studies

Income Inequality in China in the 21st Century

Shi Li
Beijing Normal University


Whether income inequality has declined in China in the last decade has been debated. Using data from the Chinese Household Income Project (CHIP) surveys in 2002, 2007, 2013, and 2018, this study tracks changes in income inequality during the 21st century. Inequality is found to have risen within rural and urban areas, but to have declined for the country as a whole during 2007-2013 and to have stabilized during 2013-2018. The decline in national inequality is largely due to a narrowing of the gap between urban and rural households as a result of rural-urban migration and the implementation of pro-rural policies since 2003. An incomplete economic transition can in part explain rising inequality in urban and rural areas separately.

International Trade and Income Distribution: Evidence from China

Oliver Holtemöller
Halle Institute for Economic Research (IWH)
Yanqun Zhang
Chinese Academy of Social Sciences


We explore the development of labor’s share in income and wage inequality in China since
2000 and estimate the effect of international trade on regional income distributions. Two major
shocks have driven Chinese exports after 2000. The first event is China’s WTO entry and
the second one is the collapse of world trade during the worldwide financial crises. We use
regional data for provinces and for prefecture-level cities and consider both events to be exogenous
with respect to wage development in the individual regions. We control for individual
worker characteristics using several waves of Chinese Household Income Project (CHIP) data. We find
that more international trade is associated with lower labor shares and higher wage inequality,

Trade Liberalization and Income Inequality: The Case of Pakistan

Muhammad Aamir Khan
COMSATS University
Terrie Walmsley
Kakali Mukhopadhyay
McGill University


Trade liberalization policies have been adopted by many developing countries to increase economic growth and reduce poverty. While the positive relationship between trade liberalization and economic growth is generally well accepted, the impact of trade liberalization on poverty and income inequality is still unclear. The objective of this paper is to examine the impact of trade liberalization on income inequality using a global trade model adapted to examine the impacts on multiple households. To illustrate, we simulate the impact of several alternative bilateral and regional free trade agreements on household income and income inequality in Pakistan. The results suggest that trade liberalization does not always lead to a decline in income inequality. Moreover, a focus on reducing income inequality in the short run through trade liberalization, may not necessarily lead to the best long run outcome, for the country or for income equality.

Toward a Fairer Society: Inequality and Competition Policy in Developing Asia

Arsenio Balisacan
Philippine Competition Commission


Rising inequality poses a serious threat to sustained growth and poverty reduction in developing Asia. Many countries in the region have adopted competition policy—also known as antitrust policy—to promote economic welfare as well as in consideration of other objectives including achieving a fairer distribution of incomes and opportunities. Preliminarily, the paper characterizes the economic and institutional issues in deploying competition policy as a tool for addressing inequality. It then uses the Philippine context to illustrate the significance of these issues in the design of a competition policy regime. The illustration suggests that, given an economy saddled with corporate market power, policy and regulatory barriers to competition, and rent-seeking activities, the pursuit of a consumer-welfare standard in competition policy promotes a fairer social outcome (reduction in income inequality and poverty) while improving economic efficiency.
Barry Naughton
University of California-San Diego
Angela Lyons
University of Illinois-Urbana-Champaign
Tomoo Kikuchi
Korea University
William Violette
U.S. Federal Trade Commission
JEL Classifications
  • D3 - Distribution
  • O5 - Economywide Country Studies