Infrastructure Development, Income Inequality, and Urban Sustainability in the People’s Republic of China

Publication | April 2017

Infrastructure investment in the People’s Republic of China can reduce income inequality as well as support sustainable urban development, but it’s uncertain how it affects income in cities.

We examine the relationship between infrastructure development and income inequality in urban areas of the People’s Republic of China. Recent policies target reductions in income inequality while increasing sustainable urban development. Infrastructure investment plays a key role in achieving both goals, yet the effects of different infrastructure on income disparities at the city level remain undetermined. Using 10 city-level infrastructure indicators relating to sustainable urban development and city income inequality measures, this study investigates the correlation between infrastructure and inequality from 2005 to 2013. The results indicate that wastewater treatment, domestic waste management, public green spaces, water efficiency, and residential power efficiency infrastructure were negatively correlated with income inequality with a lag of 2 or 3 years. Investment in these types of infrastructure might be associated with reductions in inequality ranging from 4% to 49%. Conversely, mass transit use was positively correlated with income inequality both 2 and 3 years later. An increase in mass transit ridership of 20 trips per capita annually might be associated with a 1% rise in income inequality after 2 years. Increases in water supply coverage and Internet access were also positively correlated with rising inequality.

WORKING PAPER NO: 713

Additional Details

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Subjects
  • Economics
  • Urban development
Countries
  • China, People's Republic of