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This article extends market transition theory to an analysis of inequality under the conditions of partial reform in China. Logit regression analysis indicates cadres (officials) have no greater odds than other households of being among the privileged or avoiding poverty. Entrepreneurs andformer team cadres, however, are advantaged. Despite the rise of a hybrid elite of entrepreneurs who are currently cadres that capitalizes on redistributive power to gain competitive advantage in the marketplace, increases in income inequality are modest. When market reform stimulates improved economic performance, the poor appear to benefit and experience comparable improvements in household income. As a result, there is only a slight increase in inequality, at least in the early stages of market reform. The empirical analysis is based on survey data collected in rural China in 1985.
Victor Nee (Sat,) studied this question.