From Overseas Press

China's rising inequality

(chinadaily.com.cn)
Updated: 2011-06-01 15:58

In China, where your parents work or whether they are rich or not apparently matters more than anything else as far as prospects are concerned, says an article on Economist.com on May 30.

While China helped lift over 600 million of its population out of poverty from 1981 to 2005, inequality has risen sharply over the past three decades, begins the article. This inequality, it says, is in no small measure attributable to the reviving traditional mechanisms - land, capital, schooling - through which "the well-to-do pass on their advantage to their offspring", although these traditional mechanisms were dismantled by the Chinese communists between 1949 and the late 1960s.

Indeed, the rising inequality may not be disturbing "if it reflected an increasingly dynamic, meritocratic society, rewarding greater effort or ability," but it is estimated that "63 percent of this inequality in outcomes was due to inequality of opportunity", the article cited an academic paper as saying.

In an economic sense, inequality of opportunity can be seen as "when some people are barred from making their full contribution to society, while other people reap disproportionate rewards, taking more from the national product than they add to it," while philosophers feel people should only be rewarded or punished "for things they can choose" rather than inherited wealth or social connections - things out of their control, the article explains.

The authors of the academic paper looks exactly at such factors as "the income, education and employer of a person's parents" in nine Chinese provinces, which are beyond one's control, and they find that "having richer parents helped a person's prospects" (a 10 percent increase in parental income means a 4.5 percent income boost for their children) and "having parents who were employed by the state helped a lot," says the article, "parental education, on the other hand, was no help whatsoever."

In fact, the study took a step further, in another paper co-authored by the same scholars, they turn to "an alternative factor: namely, the correlation between one brother's income and another's." All things being equal - raised by the same parents, living in the same house and neighborhood and sharing most of the "same circumstances of birth and background" - there should be a tight correlation between their incomes if these factors do matter in one's "life chances."

That's exactly what they found in China, says the article, "knowing what a person's brother earns gives you a better guide to a Chinese person's income than economists are normally able to obtain from knowing how many years of schooling and work experience a person has under his belt.”