Rural nonagricultural activities and their impact on the distribution of income: evidence from farm households in southern China

Hare, D.

China Economic Review 5(1): 59-82


ISSN/ISBN: 1043-951X
DOI: 10.1016/1043-951x(94)90015-9
Accession: 002485801

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Recent evidence indicates that rapid economic growth in rural China has been accompanied by increased inequality both within and across regions. Much of the increase in intra-regional inequality has been attributed to growth of the rural non-agricultural sector. This paper investigates the effect of non-agricultural income on inequality using survey data from a county in central Guangdong Province. For the surveyed households the distribution of non-agricultural income is indeed less egalitarian than that of agricultural income. However, wage income is more equally distributed than income from non-agricultural self-employment. Estimation of men's and women's probabilities of employment indicates that households whose members are self-employed differ systematically from households whose members are wage-earners. The empirical results provide strong evidence that rural development policy which promotes wage-type employment will affect households differently than a policy which emphasizes household-based production.