Tuesday, 20 February 2007

Research Paper: Wealth Accumulation and Distribution in Urban China

An interesting paper that I need to read. The interesting aspect appears to be the ability of party members to accumulate wealth and the role wealth accumulation has had on the ability of families to send their children to Western Unviersities to study.

"Wealth Accumulation and Distribution in Urban China"
IZA Discussion Paper No. 2553

Contact: XIN MENG
Australian National University - Department of
Economics, Institute for the Study of Labor (IZA)
Auth-Page: http://ssrn.com/author=173998

Full Text: http://ssrn.com/abstract=958717

ABSTRACT: Under socialism it was neither possible nor necessary to accumulate significant levels of personal wealth. The acceleration of economic reform in the last decade, however, has brought dramatic increases in income and investment opportunities. Reform has also reduced social protections provided by the state welfare system. In response to these changes, between 1995 and 2002, urban average real household net total wealth increased by 24 per cent per annum. There is a concern, however, that those accumulating wealth are the economic and political elites while those unable to accumulate wealth are the most vulnerable workers who are losing social protection.

Using Chinese urban survey data of 1995, 1999, and 2002, this paper investigates this issue. It is found that households with above average income have accumulated more wealth than their poorer counterparts. In addition, a large proportion of this wealth accumulation may be from non-earned sources, such as buying larger and better housing at highly subsidized prices.

Furthermore, party members and their children have benefited a great deal from this fast wealth accumulation process. Although at lower rates, the poor and vulnerable have also been able to accumulate wealth.

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