Capital Accumulation, Private Property, and Inequality in China, - - PowerPoint PPT Presentation
Capital Accumulation, Private Property, and Inequality in China, 1978-2015 Thomas Piketty Li Yang Gabriel Zucman PARIS SCHOOL OF PARIS SCHOOL OF UC BERKELEY & ECONOMICS ECONOMICS NBER Paris, December, 2017 The First WID.world
Thomas Piketty PARIS SCHOOL OF ECONOMICS Li Yang PARIS SCHOOL OF ECONOMICS Gabriel Zucman UC BERKELEY & NBER
Paris, December, 2017 The First WID.world Conference Paris School of Economics
China 1978-2015
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Introduction Data Source and Literature Methodology and Findings Where We Stand
China 1978-2015
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National Income
Unit trillion USD (2016 PPP)
1978 2016 USA 6.00 16.05 China 0.94 19.55
China 1978-2015
1. Despite China has experienced exceptional growth, we know little about how growth is distributed in China
2. Contribute to the study of global income and wealth inequality.
3. Better understood the development of China
Reference for searching for a better economic development model for other nations
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Alvaredo et al 2016)
– By combining national accounts, household surveys, fiscal data, and historical data
– Piketty and Zucman, 2014, Piketty, Saez and Zucman, 2016, and Garbinti, Goupille and Piketty 2016, 2017
methods )
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China 1978-2015
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Official national balance sheets
Unofficial national balance sheets
– Omit flows, only study stocks – No separation of private and public wealth – No differentiation of market and book value
Studies on capital or wealth accumulation (no complete balance sheet)
data (i.e. CHIP2002)
We will estimate national balance sheets
economic census and various data from NBS and PBC
wealth
national wealth
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Rural and Urban Household Survey from NBS (tabulated data, largest survey, yearly)
Limitation: no correction of top distribution and tax exempt capital income
Other national surveys (CHIP, CFPS, CHFS, micro data，smaller sample, few waves)
For more details, see WIID 3.4 by UNU-WIDER
We will estimate income distribution
Household Survey
data from high income tax payers
share of undistributed corporate profit) by using national accounts and wealth survey
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National surveys (CHIP, CFPS, micro data， smaller sample, few waves)
and Zhao, 2009; Li and Wang, 2015; Tan, Zeng, Zhu 2017)
List” (Xie and Jin, 2015)
shares using only CHIP 2002, correction of top using “Forbes Rich List” (Davies et al, 2015)
We will estimate wealth distribution
2015
1995, 2002; CFPS 2010, 2012, 2014)
waves of the “Hurun Rich List” (2002-2015)
Introduction Data Source and Literature Methodology and Findings Where We Stand
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China 1978-2015
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Other domestic capital includes
corporations
financial assets held by the private and public sectors net of their liabilities Housing
Urban house value
=living area per capita *population *market price per sqm.
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Privatization Housing Privatization
States Owned Enterprises Privatizaton
(Management Buy-out), IPO, joint ventures with foreign firms, or whole sale.
were privatized, mostly through management buyouts (Guo, Gan, and Xu(2008))
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β1996 β2015
Initial wealth effect Cumulated new savings Capital gains or losses Non-financial assets 163% 299% 31% 36% 231% Net financial assets 85% 189% 16% 172% 1% Non-financial assets 134% 74% 26% 28% 19% Net financial assets 97% 149% 19% 63% 68% National Total 479% 710% 93% 298% 320% Private Public
Sources of national wealth accumulation in China, 1996-2015 Panel A: Sources of market-value national wealth accumulation
Sector Assets
savings = private/public savings
Net wealth
China 1978-2015
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1. Survey data
(1978-2015) 2. Methods
Piketty, 2016)
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file a special declaration
number of provinces We collected all these tabulations, which together provide useful information about top incomes in China
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yp = yf + ynf ynf : tax-exempt capital income (i.e. private share of undistributed profits)
1. Estimate total amount of 𝒛𝒐𝒈 using national account 2. Estimate distribution of 𝒛𝒐𝒈 using wealth survey data 3. Estimate distribution of total personal income 𝒛𝒒 4. Transform the distribution of personal income 𝐳p into the distribution
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Privatization and Income Inequality Income inequality increased dramatically during 1998-2006 SOEs privatizing and reforming periods. It became stable since2006 after SOEs finished restructuring.
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Without correction China’s top 10% income share varies between 20% and 28%, which is lower than France.
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Income group (distribution of per adult pre-tax national income) Average annual growth rate 1978- 2015 Total cumulated growth 1978- 2015 Average annual growth rate 1978- 2015 Total cumulated growth 1978- 2015 Average annual growth rate 1978- 2015 Total cumulated growth 1978- 2015 Full Population 6.2% 811% 1.3% 59% 0.9% 39% Bottom 50% 4.5% 401% 0.0%
0.9% 39% Middle 40% 6.0% 768% 0.9% 42% 0.8% 35% Top 10% 7.4% 1289% 2.1% 115% 1.0% 44%
8.4% 1897% 3.0% 198% 1.4% 67%
9.1% 2405% 4.0% 321% 1.7% 84%
9.8% 3113% 4.7% 453% 1.8% 93%
10.4% 3817% 5.7% 685% 2.6% 158%
Table 3: Income growth and inequality 1978-2015: China vs. rich countries
Souces: China: this paper. USA: Piketty-Saez-Zucman (2016). France: Garbinti-Goupille-Lebret-Piketty (2017). Distribution of pre-tax national income among equal-split adults. The unit is the adult individual (20-year-old and over; income of married couples is splitted into two). Fractiles are defined relative to the total number of adult individuals in the population. Corrected estimates (combining survey, fiscal, wealth and national accounts data).
China USA France
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1. Survey data
2. Methods
Piketty, 2016)
3. Correct the top distribution using all available waves of the “Hurun Rich List” (2002-2015)
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thomas.piketty@psemail.eu li.yang@psemail.eu zucman@berkeley.edu
China 1978-2015
– Provides insight into a fundamental and global social question: income and wealth inequality – Covers more than 30 countries (with detailed inequality and macro data) – However the WID has only sparse coverage of China
– Dynamics of wealth-income ratio and private wealth in China since 1978? – Dynamics of income and wealth inequality in China since 1978?
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Our concepts and methods generally follow those described in the DINA Guidelines used for WID (Alvaredo et al 2016). National Income 𝑍
𝑢 = 𝐻𝐸𝑄𝑢 − 𝐿𝐸𝑢 + 𝐺𝑍 𝑢 (𝑂𝑓𝑢 𝑔𝑝𝑠𝑓𝑗𝑜 𝐽𝑜𝑑𝑝𝑛𝑓)
Private wealth 𝑋
𝑢 = Private assets − Private debt
Assets=Non-financial assets + Financial assets = House + Agriculture Lands + Other domestic capital + Currency, deposits, loans, and bonds + Insurance + Equity We similarly define public (or government) wealth 𝑋
𝑢
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Market-value national wealth 𝑋
𝑜𝑢
= Private wealth 𝑋
𝑢+ Public wealth 𝑋 𝑢
= Domestic capital 𝐿𝑢 + Net foreign assets 𝑂𝐺𝐵𝑢 Domestic capital 𝐿𝑢 = Agricultural land + Housing + Other domestic capital (including the market value of corporations, and the value of other non-financial assets held by the private and public sectors, net of their liabilities).
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An alternative measure of the wealth of corporations: Corporations’ book value = the total value of corporate assets - non-equity liabilities Residual corporate wealth 𝑋
𝑑𝑢
=Corporation’s book value-Corporation’s market value book-value national wealth 𝑋
𝑐𝑢
=Market-value national wealth 𝑋
𝑜𝑢 + 𝑋 𝑑𝑢
Remarks: Tobin’s Q=
𝐷𝑝𝑠𝑞𝑝𝑠𝑏𝑢𝑗𝑝𝑜′𝑡 𝑛𝑏𝑠𝑙𝑓𝑢 𝑤𝑏𝑚𝑣𝑓 𝐷𝑝𝑠𝑞𝑝𝑠𝑏𝑢𝑗𝑝𝑜′𝑡 𝑐𝑝𝑝𝑙 𝑤𝑏𝑚𝑣𝑓
Tobin’s Q=1 𝑋
𝑑𝑢=0.
In our studies, for now we assume Tobin’s Q for unlisted corporations is equal to 1
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Without correction China’s top 1% income share varies from 3% to 7%, which is lower than France, much lower than US.
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township enterprises
slows down
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– how is national income distributed in different groups (public vs private, top 1%, top10%, middle 40%, bottom 50%)? – how are labor and capital incomes distributed in different groups? – what contribute to the change of the wealth (saving or capital gain) in different group? – what are the capital return of different assets in different group?
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Completed analysis
assets, Market value vs Book value)
data from high income tax payers)
WID.world” (link)
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Step 1: Improve Estimates on capital share and return 1978-2015
Future work
statistic year book.
40%, and bottom 50% )
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Step 2: Estimate urban/rural level and provincial level wealth and inequality 1978-2015
Work in Progress:
Future work
Censuses)
Step 3: Long term estimates of national wealth income ratio, 1930s-1978
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