The Income Distribution of China and the United States

A last major problem, the increasing income gap between the urban and rural inhabitants, also results in the overall increasing gap of the two countries. In general, throughout the world, those in rural areas earn less than those in urban areas. Despite the fact, this gap does not increase in such a rate as it does in China and the United States. Although this applies more to China than the United States, an income difference between the urban Americans and rural Americans can also be seen. In rural America, the lack of industry and job opportunities often result in a lower mean or median income than in urban areas where much more job opportunities exist, which is the cause of the gap. Industry and job opportunities are not the only causes in the gap between rural and urban areas, but also the fact that agriculture has always been traditionally one of the largest industries in rural areas, which generally does not yield too much income. For example, in Texas, which is a relatively rural state with a lot of agriculture, the median household income in most counties is between 27,000 USD to 30,000 USD. This household income range can also be seen in other rural western states, such as New Mexico, Arizona, Colorado, and Oklahoma. However, in contrast to Massachusetts, a more urban state, the median household income for 2004 was 55,658 USD.

This income gap between rural and urban areas is more than obvious in China, where the booming economy is primarily benefiting the urban residents. Although those who live in rural areas are benefiting a little from the booming economy, their income is not improving as fast as that of the urban residents. This can be seen in the latest statistics, where for those living in urban areas, income grew by 9.6% from 2004 to 2005. For those who live in rural areas, the income growth was only 5%, a 4.6% difference. The per capita urbanite income in 2004 was 9,422 Yuan, while that of the rural residents was 2,936 Yuan. If this keeps continuing, the income difference between rural and urban residents will become wider and wider, lowering the overall income equality. There are many causes for this income disparity between rural and urban areas, but the major causes are the lack of job opportunities in rural areas, poor rural education, relatively low cost of crops, and the proportionately slow growth in crop production. Seeing as crops do not produce much income, the slow growth in crop production makes the increase of rural income proportionally lower to the increase of urban income. As depicted, the difference in income between the rural and urban residents is a major cause of the overall income inequality and one of the most important factors.

Though people can attribute the cause of income disparity to many different factors, the three factors that really stand out are immigration and migration, returns to skill, and the income divide between rural and urban areas. These factors greatly contribute to the overall income disparity and difference in standards of living in both China and the United States. Income disparity results in certain groups within a society earning much more than they ought to and others earning too less. With lower income inequality, there is more fairness in the amount of money someone earns, increasing living standards and lowering poverty. Income inequality is a serious world issue that surely needs to be addressed and with lower income inequality, other global issues are also somewhat addressed along the way.