Unequal Transition: The Widening Wealth Gap amidst China's Rapid Growth by Yu Zheng

Join us for this weeks Macroeconomics Research Seminar, Autumn Term 2023.

Yu Zheng, from the School of Economics and Finance at Queen Mary University of London, will present this weeks Macroeconomics seminar on Unequal Transition: The Widening Wealth Gap amidst China's Rapid Growth.

Abstract

We propose a quantitative theory of wealth creation and distribution during China’s transitional growth from the early 1990s, when barriers to setting up private businesses, trading housing, and migrating from rural to urban areas are struck down. In response to the changing economic environment, a small entrepreneurial class emerges and accumulates substantial wealth, whereas the majority working class, partly due to limited investment available from an underdeveloped financial sector, uses housing as the main vehicle of wealth accumulation over the course of a long-time housing boom. Our heterogeneous-agent dynamic equilibrium framework determines growth and equity jointly. We show a reasonably calibrated version of the model matches the rise in urban China’s wealth inequality since 1995 almost exactly. We further quantify the relative contribution of different reform measures to the rising inequality and discuss the welfare implications taking into account possible growth-equity trade-offs.

This seminar will be held on campus in the Economics Common Room at 1.30pm on Tuesday 21st November 2023. This event is open to all levels of study and is also open to the public. To register your place, please contact the seminar organisers.

This event is part of the Macroeconomics Research Seminar Series.