Income Inequality in China's Economic and Technological Development Zones and High-Tech Industrial Development Zones, 1995–2002

Abstract

This paper analyzes income inequality in China's Economic and Technological Development Zones (ETDZs) and High-Tech Industrial Development Zones (HIDZs). ETDZs and HIDZs are development zones located within cities that have preferential policies aimed at promoting technology and industry, and have served as instruments for attracting foreign direct investment, fomenting trade performance, stimulating scientific research, and upgrading specific industries in China. This paper uses the China Household Income Project Surveys for 1995 and 2002, which have an urban dataset covering over 6000 households and 20,000 individuals from up to 70 cities and 12 provinces. The spatial decomposition of inequality shows that cities with a zone, whether it is an ETDZ or HIDZ, have higher incomes and lower income inequality than cities without any zone. Furthermore, the gap in income inequality between cities with and without ETDZs seems to be converging, while the gap between cities with and without HIDZs is increasing because income inequality in cities with HIDZs has decreased. Lastly, while cities that have no zones have the lowest income and inequality measures, cities that have only one zone, ETDZ or HIDZ, have higher income and lower inequality measures than cities that have both an ETDZ and HIDZ.

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