Association for Public Policy Analysis & Management

There are wide gaps in household incomes between majority group members (Han) and members of the 55 officially recognized ethnic minority nationalities in China. Chinese ethnic minorities, however, disproportionately reside in poor, rural provinces of China. The intuitive explanation for the observed income disparity is that the ethnic income differences arise because of place and not because of ethnicity. Inexplicably, past studies of Han-Minority income disparities have never explicitly tested the hypothesis that rural residence explains the household income gap. Similar to the place vs race debate regarding black-white income differences in the United States, the analysis of Chinese Han vs. ethnic minority inequality requires micro-level data with information on residential patterns as well as household incomes. But yet, there are limitations in existing data to performing this analysis. The Chinese National Bureau of Statistics conducts separate surveys of rural and urban residents with separate sampling frames and selection protocols. This paper provides a novel methodology for combining the rural and urban data sets of Chinese Household Ethnic Survey (2011) to test the place vs. ethnicity hypothesis. We produce and justify the use of rescaled weights to account for the survey’s non-random sampling design. The paper then investigates whether the disproportionate residence of minorities in poor, rural areas explains the Han-minority income disparity.