| Abstract: |
This paper estimates the household income growth rates implied by food demand
in a sample of urban Chinese households in 1993–2005. Our estimates, based
on Engel curves for food consumption, indicate an average per capita income
growth of 6.8 percent per year in 1993–2005. This figure is slightly larger
than the 5.9 percent per year obtained by deflating nominal incomes by the
CPI. We attribute this discrepancy to a small bias in the CPI, which is of a
similar magnitude to the one often associated with the CPI in the United
States. Our estimates indicate stronger gains among poorer households,
suggesting that urban inflation up to 2005 in China was “pro-poor,†in the
sense that the increase in the cost of living for poorer households was
smaller than for the average one. |