Unveiling complexities: Income inequality and inequality of opportunity in China

Abstract The analysis of income and opportunity inequality in China reveals fluctuating trends at both national and provincial levels. The decrease in income inequality within provinces is attributed to regional development, while the widening income gap nationwide is linked to faster economic growth in developed areas. Since 2010, inequality of opportunity has represented between 29% and 47% of income inequality. Utilizing Roemer's “circumstance‐effort” framework, the study highlights the direct and indirect influences of circumstances on inequality of opportunity, with regional factors, age, and family economic status having significant impacts. In the indirect channel, the impact of internet usage has decreased, while education, employment, and health have shown deepened role on income. Overall, the changing influence of circumstance factors on current income underscores the evolving nature of these disparities, emphasizing the importance of addressing inequality of opportunity to foster a more inclusive and equitable society in China.