Rural Income and Wealth Inequality in China: A Study of Anhui and Sichuan Provinces, 1994-1995

China has been experiencing a great transition from a socialist collective economy to a market economy since 1978. Before the transition started, the Communist Party had established a socialist collective system with very low levels of income and wealth inequality. With the deepening of the rural reform and the development of rural industry, a large number of people were lifted out of poverty. However, as the people's living standards are rising, disparities in income and wealth are also being accentuated. This thesis's main purpose is to study the extent and determinants of income and wealth inequality in rural China. Based on a sample survey data from Anhui and Sichuan provinces, the thesis answers the following five questions: 1. How much income and wealth inequality is there in rural China in 1994-1995? 2. How has inequality in rural China changed since the reform of 1978? 3. How do the components of income and wealth in China affect the income and wealth distributions? 4. What social and economic factors are most responsible for influencing income and wealth in rural China? 5. How much of the inequality in income and wealth can be accounted for by the factors that predict income and wealth?

The main findings of the study are, first, rural income inequality was low in the two provinces in 1994-1995 and wealth inequality was higher than income inequality. Second, in the industrialized Sichuan province, nonagricultural income made a big contribution to income inequality, while in the agricultural Anhui province, agricultural income played an important role in increasing income inequality. Third, education, good land, sufficient labor, and better communication resources are positively related to income and wealth.