china_economy - 4.1 Causes This section will discuss the...

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Unformatted text preview: 4.1 Causes This section will discuss the potential causes of income disparity in China. It can be argued that the main income disparity in China can be distinguished by geographical locations, the rural and urban sector. We will examine several factors which might help to provide an explanation as to the income disparity between the rural and urban sector. We will look at education as it has been a prominent argument that educated workers are considered to be more skilled and capable. Hence, they are more in demand and are rewarded with higher salaries. In China, students in the urban areas are advantaged due to previous governmental initiatives, the lack of resources channelled into the rural education and pull factors such as better pay in the urban sector for teachers. Another area to look at is housing arrangements in China, mainly in the urban areas. In the urban sector, residents are given a household registration called hukou . Hence, it creates a form of artificial barrier for the people from the rural sector to migrate to the urban sector where the higher paying jobs are. In addition, by restricting the rural to urban migration, there is a loose protection of jobs for the urban sector as the supply of workers is kept relatively constant. Following this analysis, we will then move to discussing the transition in policy making from the transition in the year 1978 until current which can be roughly divided into three periods: the development in rural areas (from 1979 to 1983), the development in urban areas (from post 1984 to 1992), and the establishment of a sot market economy (from 1992 until current). From examining the policy transitions, we can gain a better understanding of how the income disparity came about, what has been done to rectify them and evaluate the effectiveness of the measures adopted by the government. 4.1.1 Education Education is linked to the development of one country’s citizen development. Traditionally, with higher education, there would be greater equality income levels as well as greater social equalisations, between the poor and rich in addition to greater gender equality. This is supported by the human capital model which support that “the distribution of earning, or income, is determined by the level and distribution of schooling across the population”. 1 With regards to education, there is a disparity in the type and quality of education a Chinese child would receive based on where he or she is located at. Education in the rural area is still lagging behind the education offered in the more urban area. This is mainly due to disparity of resources which are advantageous towards the urban areas. One jarring difference between the urban and rural sector in terms of education is that in the urban area education is government supported versus the family supported education in the rural areas. This means that in the urban area, parents do not have to worry about forking out money to pay for education whereas in the rural areas, parents have to set a sum of money...
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This note was uploaded on 09/03/2011 for the course ECONOMICS ec2222 taught by Professor Chan during the Spring '11 term at National University of Singapore.

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china_economy - 4.1 Causes This section will discuss the...

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