Rural-Urban Economic Disparities among China’s Elderly



Introduction

Some of the most controversial effects of China's post-1978 economic reforms have been
on regional income disparities and on the divide between urban and rural development.
How important are those income disparities? And how do they affect the elderly, who are
perhaps the most vulnerable to the changes brought by China’s transition? What is the
government’s role in providing income support?

This paper examines the rural-urban disparities in income among the elderly in
China. We examine differences in levels and sources of income and in socioeconomic
characteristics using a 1992 nationwide survey on rural and urban elderly conducted by
China’s Elderly Scientific Research Center. In addition, we investigate the type and level
of government income support programs at the local and state level.

The findings are evaluated and policy implications discussed in the context of
China’s transition to a market economy and choice of development strategies. The rest of
the paper is organized as follows. In the first section we provide an overview of China’s
income inequality research including a preliminary discussion of the urban-rural divide. In
the second section, we present the data and methodology. The empirical findings are
discussed in sections three and four. Concluding remarks are offered in section five.

1. Poverty and income inequality in post-reform China

China embarked on a market-based economic reform in 1978.1 By most standards this
reform has been a colossal success. Between 1978 and 1996 real per capita income GDP
increased at an annual average rate of 8 percent (DaCosta and Carroll, 2001). Urban and
rural consumption per capita increased at an average rate of 5.6 and 9.7 percent
respectively, from 1978 to 1985 (Perkins, 1988). Rural consumption grew particularly
fast. In fact, “the rise in real per capita consumption of the average Chinese farmer was
greater during the 7 years after 1978 than in the entire previous 26 years” (Perkins 1988,
pp. 636). Other studies on the effects of economic reform reinforce this idea.

How equitable has the distribution of these benefits been? Income distribution
studies suggest that the rural distribution of income during the 1970s and 1980s may have

1 See for instance Perkins (1988) for a detailed analysis of this process.



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