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![]() India, too, adopted market reforms in the late 1980s and ’90s.Īlthough surprising, the distinction between inequality and absolute income is an important one that is generally ignored in most of the literature. ![]() Inequality rose, but the poor became substantially richer. At the same time, the absolute income of the poorest decile approximately doubled. The ratio of income of those in the top decile to those in the bottom decile went from sixteen to twenty over the past three decades. India, with a population almost the same as that of China, experienced a similar phenomenon, albeit to a lesser extent. Indeed, the rapid lifting of so many out of the worst state of poverty is likely the greatest change in human welfare in world history.Ĭhina’s experience is perhaps the most pronounced and most important because so many are affected. Today’s poor in China remain poor by developed-country standards, but there is no denying that they are far better off than they were even two decades ago. Throughout the 1980s and before, a large fraction of the Chinese population lived in abject poverty. ![]() Today, the poorest Chinese earn five times as much as they did just two decades earlier. ![]() Although it took a decade, in the mid-1990s income of the poorest in China began to grow and the growth rate picked up in the last decade. Figure 2, which tracks the absolute monthly income of the lowest decile in China over time, suggests a different conclusion. ![]()
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