Keywords: Social policy; economic distance; inequality; pensions; agricultural subsidies
Gao, Qin (School of Social Work, Columbia University, USA)
Yang, Sui (Rural Development Institute, Chinese Academy of Social Sciences, China)
Zhai, Fuhua (Graduate School of Social Service, Fordham University, USA)
Wang, Yake (School of Insurance and Economics, University of International Business and Economics, China)
The Chinese government has launched a series of social policy reforms during the past 15 years that aimed to provide basic social protection to its citizens and unify the long-segregated social benefit systems across the urban-rural division. Part of the reason for these expansions is the rapidly rising income inequality in China that has surpassed the conventional alarm levels and threatens political stability and social harmony, both of which are high on the ruling communist party’s agenda. China’s national Gini coefficient rose from 0.44 in 2000 to to 0.49 in 2008, and then declined somewhat to 0.47 by 2012 but remained among the most unequal third of all countries (Li & Sicular, 2014; Ravallion & Chen, 2007). The fast growing number of Internet and social media users during this period also helped expose the widening income gaps and the imbalances in social benefits enjoyed by different population groups, promoting the awareness and demand for greater social protection among Chinese citizens.
To address these challenges and shift China away from solely focusing on economic growth, the Chinese government made significant social policy reforms to expand its social insurance and social assistance programs to extend coverage from urban employees to the urban non-employees, rural residents, and to some extent, rural-to-urban migrants. In 2006, the government launched a grand campaign to Build a New Socialist Countryside through a series of initiatives to improve the livelihood of rural residents. The enactment of the 2008 Labor Contract Law required all employers to sign labor contracts with employees and provide social insurance coverage for employees, including migrant workers.
How successful was this series of social policy reforms in redistributing resources and narrowing the economic distance between the poor and rich? Existing studies have examined the redistributive effects of selected social benefits, but rarely the complete set of social benefits. In addition, most existing studies relied on the widely used Gini coefficient to capture the redistributive effects of the social benefits on overall income distribution. However, none have specifically focused on the economic distance between the poor and the rich, the two ends of the income distribution that are often more sensitive to social benefit receipts than those in the middle.
In this chapter, we use data from the China Household Income Project (CHIP) 2002, 2007, and 2013 surveys to investigate how social policy reforms affected the economic distance between the poor and rich during 2002-2013. We use an innovative and revealing method to examine economic distance between the low- and high-income household and shed light on the income distribution beyond the overall level of inequality as captured by the Gini coefficient. Our findings can supplement the evidence that is based on the analyses of selected social benefits and relying on the Gini measure and offer important implications as China continues its social policy reforms and expansions.
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