YOL 89 NO. 2 INCOME DISTRIBUTION IN CHINA TABLE 1-URBAN INCOME INEQUALITY IN CHINA and individual enterprises, and private trans AND ITS SOURCES, 1988 AND 1995 fers were more equally distributed in 1995 than in 1988. All other components of total income were less evenly distributed, particu Share of total Gini or larly the rental value of owned housing and oncentration housing subsidies 19881995 The two columns of table 1b contain in- formation on the contribution of each source Cash income from employment 44. 42 61.30 0.178 0.247 of income to overall inequality in the distri- 0.740.530.4130.04 ticular source depends both on the share of that individual enterprises 0.491.2704370484 source in total income and its concentration ntal value of owned housing 13. 4 9.74 0.26 housing subsidy) account for 93.7 percent of .390.3380.639 ratio. Four sources of income(wages, pen- 516 sions, the rental value of owned housing, and Private transfers, etc overall inequality. In the case of wages and the rental value of owned housing, both the con centration ratio and the share in total income overall inequality rose In the case of housing subsidies, the cor centration ratio rose dramatically(from 0 Measure 995 to 0.516), but their share of total income fell to974 ome from employment 9. 8 2 0 cent of total income ). The opposite occurred in the case of pensions. The share of pensions 0.1 in total income rose but the concentration ra- tio fell slightl 15.l Despite changes in the composition of in Private transfers, etc. 74 3.2 come, increased inequality in urban China was due entirely to greater inequality in the distri Source: Khan and Riskin (1998) bution within individual components of ome. The change in the sources of income played no role in explaining the increase in urban inequality. Had the com- ita income rather than in order of income re- position of income in 1995 remained the same ceived from each source of income. The Gini as in 1988 and only the distribution within in coefficient is simply a weighted average of the dividual components changed it did. the concentration ratios, where the weights are the Gini ratio of urban income distribution in 1995 shares of each source of income in total in- would have been exactly the same as its actual come. The concentration ratio of a particular value source of income thus measures how equally that source of income is distributed over I. Urban Poverty household per capita income from all sources In 1988, only the distributions of wage in- The real income of urban households in ome and net subsidies other than housing creased 4.48 percent each year between 1988 were becoming more equal; all other compo- and 1995. This is far lower than the rate of nents of total income were growing more dis- growth in per capita GDP ( which was growing parate. In 1995 wage income, net subsidies at 8. 1 percent per year for China as a whole) other than housing, pensions, and income from private and individual enterprises were be coming more equally distributed; the opposite derreporting of this source of income. was true for the other four sources of income. we put little ce in the estimates of its levels and However, only pensio from private distril