Although the relation between economic development and income distribution is a long-standing issue, various arguments are developed even now. In China, which has been developing rapidly, the problem of regional disparity and income differential has become acute.
This paper examines the income inequality in Shanghai, which is a core growth center of China. Using the data on income distribution in 1985-2002 to be found in Shanghai statistical yearbook, income distribution structure is estimated using the Gauss kernel, and the changes in income distribution are investigated.
The paper also computes coefficient of variation and Gini coefficient, and shows that the income inequality in urban Shanghai reached a peak in 1995. On the other hand, when the rural and urban data are combined, the inequality seems to continue to rise. So as whole, Shanghai continues to face the problem of income inequality.
Analysis using Markov transition matrix supports the above conclusions.
