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Income inequailty, Reasons behind ... - Coggle Diagram
Income inequailty
Reasons/Themes:
Economic reforms and policy inclination
Uneven regional development
The
eastern coastal areas
have benefited from
foreign investment and trade
, while the economic development of the central and western regions has been relatively slow
Uneven distribution of
infrastructure and industry
The central government collects taxes, while local governments are responsible for public services and rely on land finance, and land prices vary widely
Fiscal and
tax policy
The tax system is skewed towards the cities, (agricultural tax)
Public spending
is high in urban areas, while investment in infrastructure and social security in rural areas is insufficient. :red_flag:
Regressive tax
goes against to the poor (Rich people can avoid taxes and direct tax to capital gain is low compare to indirect tax) :red_flag:
The government has increased indirect taxes such as consumption tax and value-added tax to compensate for tax avoidance by high-income groups.
To keep investment attractive, the government cuts corporate taxes and uses taxes on workers to make up for it
Lack of transparency of
transfer payment funds
Urban-rural dual structure
Household registration(
Hukou) system restricts rural-to-urban migration
and hinders social mobility. :red_flag: :star:
A complete abolition of the household registration system would increase the fiscal burden on the government, hurt industrial profit margins and weaken the government's grip on land
Urban dwellers have better
public resources
(education, health care, employment opportunities)
Uneven financial development
Credit resources mainly flow to
state-owned
enterprises
and large cities
Small and medium-sized enterprises and rural residents have difficulty in obtaining loans.
The dominance of state-owned banks, low risk appetite, and the government's cautious approach to financial liberalization
Financial assets such as the stock market and real estate are mainly held by
high-income groups
,
widening the gap between the rich and the poor.
Inequality between
industry
High-wage industries (finance, technology) are mainly concentrated in cities, while rural and manufacturing workers earn less. :red_flag:
State-owned enterprises and monopolies earn much higher wages than ordinary workers
Manifestation
Urban-Rural Income Gap :red_flag:
Regional Income Disparity :red_flag:
Sectoral Wage Gap
Ownership-Based Income Gap
Gender Pay Gap
Educational Wage Gap
Capital vs. Labor Income Gap
Measurement
Gini coefficient
Theil index
Atkinson index
Reasons behind ...