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Labour Market Disparity, Poverty, and Inequality in Urban China China Perspectives 2010/4 | 2010 Rural Migrants: On the Fringe of the City, a Bridge to the Countryside Labour Market Disparity, Poverty, and Inequality in Urban China Fei Guo et Zhiming Cheng Édition électronique URL : http://journals.openedition.org/chinaperspectives/5334 DOI : 10.4000/chinaperspectives.5334 ISSN : 1996-4617 Éditeur Centre d'étude français sur la Chine contemporaine Édition imprimée Date de publication : 15 décembre 2010 ISSN : 2070-3449 Référence électronique Fei Guo et Zhiming Cheng, « Labour Market Disparity, Poverty, and Inequality in Urban China », China Perspectives [En ligne], 2010/4 | 2010, mis en ligne le 01 décembre 2013, consulté le 28 octobre 2019. URL : http://journals.openedition.org/chinaperspectives/5334 ; DOI : 10.4000/chinaperspectives.5334 © All rights reserved Special Feature s e v Labour Market Disparity, i a t c n i e Poverty, and Inequality in h p s c r Urban China e p FEI GUO AND ZHIMING CHENG ABSTRACT : This paper examines poverty and income inequality in urban China by analysing recent survey data collected in four of the largest Chinese cities (1) . Using a number of quantitative measurements, including poverty indices and Gini coefficients, the paper investigates income poverty and inequality among three groups, namely urban locals, urban migrants, and rural migrants. The results strongly suggest that urban poverty and inequality are a serious issue and that rural migrants have become a major segment in the urban poor class. The results are expected to contribute to the debate on how to improve public policy on poverty alleviation, which currently focuses only on officially registered urban locals. Introduction but guaranteed lifelong employment and substantial fringe benefits including housing, education, healthcare, and pen - he Chinese economy has been experiencing tremen - sions through a danwei -style (work unit) organisational sys - dous growth since economic reform commencing in tem that enclosed the vast majority of urban residents under Tthe late 1970s. Agrarian reform has transformed the the shelter of the state sector. (6) Indeed, in the late 1980s, it rural areas, which were under the shadow of widespread poverty and disadvantaged by urban-oriented state develop - 1. This paper is part of an Australian Research Council (ARC) Discovery project entitled Mi - ment policies, into the most successful case of combating ex - grant Labour in Large Chinese Cities. The authors would like to acknowledge the con - structive comments and useful suggestions from two anonymous referees and the in - treme monetary poverty. (2) As measured by the World strumental contributions by Professor Graeme Hugo at the University of Adelaide and Bank’s (American) dollar-a-day poverty standard based on Professor Yuan Xin at Nankai University in the project. The normal disclaimer applies. 2. For example, see the following research: Shenggen Fan, Linxiu Zhang, and Xiaobo Purchasing Power Parity (PPP) at 1993 international Zhang, “Reforms, Investment, and Poverty in Rural China,” Economic Development and prices, (3) China’s remarkable increase in per capita income Cultural Change , vol. 52, no. 2, 2004, pp. 395-421; Jyotsna Jalan and Martin Ravallion, has fuelled an equally remarkable decrease in the extreme “Is Transient Poverty Different? Evidence for Rural China,” Journal of Development Stud - ies , vol. 36, no. 6, 2000, pp. 82-99; Carl Riskin, “Chinese Rural Poverty: Marginalized or poverty rate from 74 percent at the beginning of the reform Dispersed?” , American Economic Review , vol. 84, no. 2, 1994, pp. 281-284. to 15 percent in 2004; in other words, more than 500 mil - 3. Purchasing Power Parity is a widely adopted method for estimating the correct value of (4) a currency, which in many cases, may differ from its current market value. See The lion people moved out of poverty. In particular, China has Economist , “Purchasing Power Parity,” retrieved on 18 August 2010 from been praised for meeting the foremost of the Millennium http://www.economist.com/research/economics/alphabetic.cfm?term=purchasing - Development Goals — one of which is to halve the 1990 powerparity. 4. Refer to World Bank, China Quarterly Update (February 2008) , Beijing, World Bank Of - poverty incidence — 14 years ahead of the 2015 target for fice, 2008. Earlier estimates before the recently improved estimate of PPP showed a re - developing countries, and for providing a plausible model for duction from approximately 64 percent to 10 percent between 1981 and 2004. See (5) David Dollar, “Poverty, Inequality and Social Disparities during China’s Economic Re - African countries that have been struggling with poverty. form,” World Bank Policy Research Working Paper , no. 4253, 2007. Aside from these promising anti-poverty outcomes, social 5. See Martin Ravallion, “Are There Lessons for Africa from China’s Success against disparity and differentiation, among which inequality and Poverty?”, World Bank Policy Research Working Paper , no. 4463, 2008. The author ar - gues that two lessons stand out from China’s experience: first, the importance of pro - urban poverty are arguably the most severe, have emerged ductivity growth in smallholder agriculture with the aid of market-based incentives and as relatively new socio-economic issues in China, which was public support; second, the role of strong leadership and a capable public administra - once an extremely egalitarian or collectively poor society tion at all levels of government. 6. See David Bray, Social Space and Governance in Urban China: The Danwei System from under the Mao regime. One of the reasons for the near non- Origins to Reform , Stanford, Stanford University Press, 2005; Xiaobo Lü and Elizabeth J. existence of urban paupers was the ideological dominance of Perry (eds.), Danwei: The Changing Chinese Workplace in Historical and Comparative Per - spective , Armonk, M.E. Sharpe, 1997; Andrew G. Walder, Communist Neo-Traditionalism: communism, which discouraged personal income incentives Work and Authority in Chinese Industry, Berkeley, University of California Press, 1988. 16 N o 2010/4 Labour Market Disparity, Poverty, and Inequality in Urban China s e v i a Table 1. Migrant workers and employment in urban China t c n i e h p s c Rural migrants (millions) Urban employment (millions) Ratio (%) r Year e (1) (2) (1) / (2) p 2000 78.49 212.74 36.9 2001 83.99 239.40 35.1 2002 104.70 247.80 42.3 2003 113.90 256.39 44.4 2004 118.23 264.76 44.7 2005 125.78 273.31 46.0 2006 132.12 283.10 46.7 2007 136.49 293.50 46.5 2008 145.33 302.10 48.1 Sources: China Statistical Yearbook (NBS, 2001-2009), China Rural Statistical Yearbook (NBS, 2001-2009). is believed that less than one percent of the urban popula - embedded labour retrenchment have radically swelled the tion was classified as poor, and these were mainly the dis - changing social forces. Laid-off workers ( xiagang gongren ) — abled, widowed, and others who were not affiliated with any or the new urban underclass (13) — have been created in the danwei , and who were largely looked after by government. (7) magnitude of hundreds of millions, although the accurate The labour market in making and the urban economy in re - structuring are the context within which urban poverty and 7. World Bank, China: Strategies for Reducing Poverty in the 1990s , Washington, World Bank, 1992; Zhiyi Guo, “ Pinkun shizhi de lilun renshi yu zhongguo de fan pinkun inequality are emerging. Explicitly advancing returns to edu - douzheng (Poverty and China’s anti-poverty efforts),” Xibei renkou (Northwest Popula - cation and encouraging rural-urban migration, China is a tion Journal), vol. 3, 1996, pp. 3-6. classic example of what the Nobel Prize economist Arthur 8. W. Arthur Lewis, “Economic Development with Unlimited Supplies of Labour,” The Man - chester School , vol. 22, no. 2, 1954, pp. 139-191. Lewis suggests: “Development must be inegalitarian be - 9. Refer to the work by David Dollar, op. cit . cause it does not start in every part of the economy at the 10. See a number of works in this research area: Ben Jann, “Comment: Earnings Returns to same time”; (8) or of Deng Xiaoping’s blunt words: “Let Education in Urban China: A Note on Testing Differences among Groups,” American So - ciological Review , vol. 70, no. 5, 2005, pp. 860-864; Haizheng Li, “Economic Transition some people get rich first.” Altering the state-led job assign - and Returns to Education in China,” Economics of Education Review , vol. 22, no. 3, ment system typified by low salaries in the state sector, a 2003, pp. 317-328; Zhiqiang Liu, “The External Returns to Education: Evidence from Chinese Cities,” Journal of Urban Economics , vol. 61, no. 3, 2007, pp. 542-564; Xiao - labour market in which people can look for better jobs and gang Wu and Yu Xie, “Does the Market Pay Off? Earnings Returns to Education in Urban higher pay outside the state sector has been developing since China,” American Sociological Review , vol. 68, no. 3, 2003, pp. 425-442. the late 1970s. It is estimated that the wage returns of one 11. See extensive research in these areas in the following references: Simon Appleton, Lina Song and Qingjie Xia, “Growing out of Poverty: Trends and Patterns of Urban Poverty in additional year of schooling increased from 4 percent to 11 China 1988-2002,” World Development , vol. 38, no. 5, 2010, pp. 665-678; Sylvie Dé - percent between 1988 and 2003, progressively concentrat - murger, Martin Fournier and Li Shi, “Urban Income Inequality in China Revisited (1988- 2002),” Economics Letters , vol. 93, no. 3, 2006, pp. 354-359; Laura Hering and Sandra (9) ing income distribution among more educated people, al - Poncet, “Market Access and Individual Wages: Evidence from China,” The Review of though there is mixed evidence as to whether education is Economics and Statistics , vol.
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