The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.
This paper is the first comprehensive empirical study of earnings, income, and consumption
inequality in urban China from 1986 to 2009, using unique micro-level data from the Urban
Household Survey (UHS). The paper documents a drastic increase in economic inequality for
the sample period. The paper finds that consumption inequality closely tracks income
inequality, both over time and over the life cycle. The paper believes that the main driver of
this co-movement could be a dramatic increase in noninsurable idiosyncratic permanent
income shocks after the early 1990s, associated with the economic transition in urban China.