The dynamics of redistribution, inequality and growth across China’s regions

Yang, Xiaoliang; Barros, Lucy; Matthews, Kent; Meenagh, David

doi:10.1016/j.jpolmod.2024.01.011

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The dynamics of redistribution, inequality and growth across China’s regions

Xiaoliang Yang, Lucy Barros

, Kent Matthews, David Meenagh

Journal of Policy Modeling, Volume: 46, Issue: 3, Pages: 613 - 637

Swansea University Author: Lucy Barros

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DOI (Published version): 10.1016/j.jpolmod.2024.01.011

Abstract

China’s experience has triggered debate over a trade-off between aggregate growth and regional equity. We develop a three-region model of China where local government decisions are driven by central government tax transfer instruments. These affect local TFP dynamics and regional inequality. We find...

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Published in:	Journal of Policy Modeling
ISSN:	0161-8938
Published:	Elsevier BV 2024
Online Access:	Check full text
URI:	https://cronfa.swan.ac.uk/Record/cronfa65544
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first_indexed	2024-01-30T21:57:26Z
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spelling	v2 65544 2024-01-30 The dynamics of redistribution, inequality and growth across China’s regions 17877dc7759b0b75dc595a574bcc9b49 0000-0002-8421-107X Lucy Barros Lucy Barros true false 2024-01-30 SOSS China’s experience has triggered debate over a trade-off between aggregate growth and regional equity. We develop a three-region model of China where local government decisions are driven by central government tax transfer instruments. These affect local TFP dynamics and regional inequality. We find regional asymmetry in how transfers are awarded. Transfer policies pursued since the 1994 tax-sharing reform prevented a 15% rise in regional inequality, at an 8% cost to aggregate GDP. Temporarily reducing local government non-tax fees on private firms in poorer regions lowers regional inequality permanently at no aggregate growth cost, as would imposing uniformity in central transfer rules. Journal Article Journal of Policy Modeling 46 3 613 637 Elsevier BV 0161-8938 Regional inequality; China; Fiscal decentralization; Redistribution; Local Government; Growth 1 5 2024 2024-05-01 10.1016/j.jpolmod.2024.01.011 COLLEGE NANME Social Sciences School COLLEGE CODE SOSS Swansea University SU Library paid the OA fee (TA Institutional Deal) This research is supported by the ESRC-Newton Grant ES/P004199/1, NSFC #71661137005 and the Fundamental Research Funds for the Central Universities, ZUEL#2722022BQ017. 2024-06-07T12:10:28.5056198 2024-01-30T21:28:09.4378452 Faculty of Humanities and Social Sciences School of Social Sciences - Economics Xiaoliang Yang 1 Lucy Barros 0000-0002-8421-107X 2 Kent Matthews 3 David Meenagh 4 65544__30566__3ce0eac362d4444ab5be3e33219b1e5b.pdf 65544.VoR.pdf 2024-06-07T12:07:56.2894333 Output 4342235 application/pdf Version of Record true © 2024 The Author(s). This is an open access article under the CC BY license. true eng http://creativecommons.org/licenses/by/4.0/
title	The dynamics of redistribution, inequality and growth across China’s regions
spellingShingle	The dynamics of redistribution, inequality and growth across China’s regions Lucy Barros
title_short	The dynamics of redistribution, inequality and growth across China’s regions
title_full	The dynamics of redistribution, inequality and growth across China’s regions
title_fullStr	The dynamics of redistribution, inequality and growth across China’s regions
title_full_unstemmed	The dynamics of redistribution, inequality and growth across China’s regions
title_sort	The dynamics of redistribution, inequality and growth across China’s regions
author_id_str_mv	17877dc7759b0b75dc595a574bcc9b49
author_id_fullname_str_mv	17877dc7759b0b75dc595a574bcc9b49_***_Lucy Barros
author	Lucy Barros
author2	Xiaoliang Yang Lucy Barros Kent Matthews David Meenagh
format	Journal article
container_title	Journal of Policy Modeling
container_volume	46
container_issue	3
container_start_page	613
publishDate	2024
institution	Swansea University
issn	0161-8938
doi_str_mv	10.1016/j.jpolmod.2024.01.011
publisher	Elsevier BV
college_str	Faculty of Humanities and Social Sciences
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department_str	School of Social Sciences - Economics{{{_:::_}}}Faculty of Humanities and Social Sciences{{{_:::_}}}School of Social Sciences - Economics
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description	China’s experience has triggered debate over a trade-off between aggregate growth and regional equity. We develop a three-region model of China where local government decisions are driven by central government tax transfer instruments. These affect local TFP dynamics and regional inequality. We find regional asymmetry in how transfers are awarded. Transfer policies pursued since the 1994 tax-sharing reform prevented a 15% rise in regional inequality, at an 8% cost to aggregate GDP. Temporarily reducing local government non-tax fees on private firms in poorer regions lowers regional inequality permanently at no aggregate growth cost, as would imposing uniformity in central transfer rules.
published_date	2024-05-01T12:10:27Z
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The dynamics of redistribution, inequality and growth across China’s regions

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