Abstract

In China, ageing and income inequality are two prominent phenomena that have garnered considerable attention. Is age a significant factor in the rise of income inequality? This article examines the mechanisms by which ageing affects income inequality and then demonstrates, using theoretical and empirical evidence, that ageing increases income inequality in China. Using relevant spatial panel data for 31 Chinese provinces from 2002 to 2018, a spatial Durbin model with random effects is constructed to investigate the spatial effects of ageing on income inequality. Ageing significantly increases income inequality, with the effects concentrated at the top rather than the bottom, according to the estimation results. That is, an increase in the elderly dependency ratio in one region has a significant positive spillover effect on income inequality in neighbouring regions. The child dependency ratio has a negligible negative spillover effect, with changes in that region's child dependency ratio having no discernible effect on income inequality in neighbouring regions. Additionally, GDP, FDI, FIR, FTD, urbanisation, and human capital all have a varying effect on income inequality.