The Distribution of Income in China.

This volume is a collection of eight readings about various aspects of income distribution in China. The readings were written by combinations of nine individuals who participated in a significant research project started in 1988 and directed by the editors. The quality of the book largely reflects the quality of the research project.

The research project appears to be quite comprehensive and generally well done; the sample consisted of over 19,000 households. The definition of income used in the project is explained in the first chapter and a description of the survey and the methodology is set forth in an "annex" (appendix). The concept of income is broad and included in kind payments, direct subsidies and various imputed items. Two limitations are noted by the authors in the introduction. One is that the urban sample appears to be not as good as the rural sample and further research on urban income distribution is probably desirable. The other is that, because of the expanded concept of income, it is not possible to make many longer term comparisons as to how income distribution has changed.

The eight chapters in the book are organized around three interrelated parts. Part I begins with a factual description of the results of the research project and describes how income is distributed. This part also analyzes some of the distributional characteristics which occurred during the reform which began in the late 1970s. The second part contains three chapters which focus on the nature of income and wealth distribution in rural areas, including an examination of the incidence of rural poverty. The final part is focused on employment and human capital, including a chapter on the determinants of educational attainment.

There are a number of surprising findings - surprising because they are atypical of what many economists would expect to find. The research project found, for example, that there is a regressive tax structure. The distribution of income and wealth is described by the editors as "egalitarian." That is an odd word choice, particularly given that the extent of inequality is significantly different in urban areas than in rural ones. Inequality is measured with a Gini coefficient. The coefficient for income for all of China was found to be 0.34. The distribution of wealth involved a lower Gini coefficient of 0.31, also a somewhat surprising finding. The urban coefficient was 0.23, much lower than for the whole population. This should probably be viewed as a tentative finding, since the urban sample was not as good as the rural one. Another curious finding is the conclusion that it should be possible to eliminate rural poverty fairly quickly. That conclusion, however, might be a bit optimistic; reference is also made to the "massive" poverty in China.

The editors begin the introduction with a discussion of the controversy which surrounds the subject of Chinese income distribution. The controversy derives from a lack of data which the research project seeks to correct, and also from the usual kinds of value judgments that accompany discussion of the "right" distribution of income. The readings in the book, however, do not appear to contain strong biases. There are, however, a number of policy pronouncements made and certainly not everyone would share the writers' views as to the appropriateness of a particular policy. Taken together, the book seems complete; nothing in the way of serious omissions are in evidence. There can be little doubt that the research project, and the resulting readings book, make a major contribution in understanding the nature of income distribution in China - a subject which is of considerable importance given the size and population of the country.

John Rapp University of Dayton