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Measuring the Level and Inequality of Wealth: An Application to China

Authors

  • Patrick Ward

    Corresponding author
    1. International Food Policy Research Institute
    • Correspondence to: Patrick Ward, International Food Policy Research Institute (IFPRI), NASC Complex, CG Block, Dev Prakesh Shastri Marg, New Delhi 110012, India (p.ward@cgiar.org.).

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  • Note: This research uses data from the China Health and Nutrition Survey (CHNS). We thank the National Institute of Nutrition and Food Safety, China Center for Disease Control and Prevention, Carolina Population Center, the University of North Carolina at Chapel Hill, the NIH (R01-HD30880, DK056350, and R01-HD38700) and the Fogarty International Center, NIH for financial support for the CHNS data collection and analysis files from 1989 to 2006 and both parties plus the China-Japan Friendship Hospital, Ministry of Health for support for CHNS 2009 and future surveys. We thank Jerry Shively, two anonymous reviewers, and the editor for providing helpful comments on earlier versions of this manuscript.

Abstract

We construct and compare three distinct measures of household asset wealth that complement traditional income- or expenditure-based measures of socioeconomic status. We apply these measures to longitudinal household survey data from China and demonstrate that household asset wealth has been increasing over time, a theme consistent with many previous studies on the process of development in China. Unlike other studies that have shown rising income inequality over time, however, we show that asset wealth inequality has actually been declining in recent years, indicating widespread participation in the benefits of economic reforms. Furthermore, the evolution in the cumulative distribution of household welfare is such that social welfare has been increasing with the passage of time, despite rising inequality in the early years of the survey.

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