Xiaobing Wang (University of Manchester) - Towards Common Prosperity in China

Co-authors: Shi Li (Zhejiang University), Yangyang Shen (Beijing Normal University) and Peng Zhan (Zhejiang University)

This paper develops a new class of poverty and inequality measures we call common prosperity. This measure complements existing classes of measures and allows decomposition across income sources or components of consumption expenditure. This framework enables us to study the trade-off between productivity-enhancing public investment and public transfers, and to link the inequality of opportunity and the labor market. We apply this theoretical framework to five waves of the China Household Income Projects data from 1988 to 2018. It shows how China is gradually moving from deep poverty to moderate prosperity, and examines the problems China is facing in order to achieve common prosperity for everyone.

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