Income Gap and the Risk of Middle-Income Trap Facing China

Cai Fang and Wang Meiyan
Institute of Population and Labor Economics, Chinese Academy of Social Sciences, Beijing

Abstract:  International experience shows that economic stagnation and deterioration of income distribution are both the cause and effect of each other and also reinforce each other. Such a relationship may put some high-growth countries into the middle-income trap. Income levels in China are above average, but economic growth is decelerating. At such a time, China should attach great importance to addressing the widening income gap. This paper attempts to integrate official data on income with researchers’ surveys to examine income distribution in China. It reveals the causes for unequal and unfair income distribution and illustrates the policy significance of reforming primary and secondary distributions to adjust the pattern of income distribution.
Keywords: income gap, middle-income poverty, hidden income

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