An Empirical Study of China’s Income Convergence Hypothesis across the Provincial Regions

Based on China's 31 provincial-level panel data of regional per capita income from 2000 to 2008, this paper applies a variety of panel unit root test methods and different benchmarks to test the income convergence hypothesis. The results find that, taking Beijing’s per capita income as a benchmark, there exists only the conditional convergence and no absolute convergence whether it is for the whole country or three single regions, whether urban or rural areas. And to take the national per capita income as a benchmark, there exists absolute convergence as well as conditional convergence for both urban and rural areas at the national level. In the case of three single regions, when taking the group average as the benchmark, there exists absolute convergence in urban areas while for the rural areas the absolute convergence does not exist. Further, there exists conditional convergence in Eastern and Western areas but not in Middle area.