摘要：China is a rural-urban divide society with a striking feature of enormous income gap between rural and urbanhouseholds. The income gap has changed over time, but it has shown a monotonically rising trend since the late1990s. According to the official definition of household income (defined by the National Bureau of Statistics, NBS),the urban-rural income ratio went up from 2.47 in 1997 to 3.23 in 2003ii. Moreover, if China is put into theinternational context, the urban-rural income gap in China is much larger than many other countries (Knight andSong, 1999). If the gap is continuing widening, China will become a county with the largest urban-rural income gapeven based on the official income definition, as some researchers predicted (Li and Yue, 2004). The wideningincome gap has recently attracted more attention from the researchers and policy makers, domestically andinternationally. At the same time, the argument on the estimates of the urban-rural income gap has become moreintensive. There are two different opinions. One opinion argues that the official figures of urban-rural income gapare overestimated because the regional living costs are not taken into account. Given the fact that the living costs arehigher in urban areas than in rural areas, the actual income gap between rural and urban households should besmaller than what is shown by the official statistics if the household income is adjusted by the regional living costs.The second opinion believes there is significant underestimation of the urban-rural income gap and proposes astrong argument that the income of urban households are underestimated since some income components, especiallysubsidies in kind provided for urban residents but not for rural residents, are not fully taken account into the NBS’sdefinition of households (Li and Yue, 2004). If these income components would be included in the total householdincome, the income gap would be much larger than it is stated in the existing literature. Some scholars even declarethat the actual income ratio of urban to rural households is over 5 times.
