The Impacts of Economic Transition on Income Inequality of China

This paper focuses on the impact of China’s sectorial reform on income inequality within the country and between the USA. We found that when we look at the full period (1991-2020), as the employment in the primary sector decreases, income inequality within the country is undeterminable. However, when we examine time periods 1991-2007 and 2008-2020, we found that income inequality had intensified in the first period and had decreased in the second period. The income gap between China and the USA has been constantly decreasing, whether looking at GNI or GNI per capita. Through this research, we hypothesize that agrarian policies may play a crucial role for further decrease in income inequality in China.