Reaccions de cicloaddició [2+2+2] d’endiins acíclics

The empirical results of the 2SLS regressions are presented in Table 2 along with results of OLS models for comparison. The summary of the percentile shifts is presented in Table 6, whereas the more complete version of the table can be found in the Appendix. Model 1 uses the total number of patents granted as a predictor of the change in regional inequality of consumption, while Model 2 differentiates the patent types to highlight how each is responsible for the observed effects. The dependent variables in both models is the log transformed value of the Theil index. To detect potential multicollinearity issues, I used variance inflation factors (VIF tests) for both models, and no evidence of

multicollinearity was found in either of the equations. Several independent variables were not normally distributed, resulting in a large kurtosis value, hence I used the change in

51 percentile range for interpretation of the coefficients.

While the influence of the total number of patents granted per 10000 residents is statistically significant in the OLS model, the significance is lost with the introduction of instrumental variables, which increased the standard error thereby decreasing the

statistical significance of the regression coefficient.

When analyzed separately, design patents gain statistical significance, suggesting that when analyzing the influence of patents, the sum is different than its parts. The evidence suggests that an increase from the 10th _{percentile to the 25}th _{percentile in the number of}

design patents granted is expected to decrease within region income inequality by 0.8 percentage points, while utility and invention patents fail to reach statistical significance.

The results indicate a consistently significant impact of the savings rate, suggesting than a 10-percentage point increase in the savings rate is associated with a 1.29

percentage point increase in income inequality within a region i. The finding implies that wealthy individuals are able to save more to either secure higher income in the future or pass it on to the future generations, which worsens the inequality within regions, which provides more evidence in support of Alvarez-Cuadrado & Vilalta’s (2012) work.

The interest rate spread had a significant negative influence on the change in income inequality across both models, suggesting that a 1% increase in the difference between the lending and the borrowing rates is expected to decrease interregional income

inequality by 0.1 percentage points. This result might seem counterintuitive as the benefit of workers is relatively smaller than that of the bank. However, as the IMF indicated, a wider interest rate spread is associated with the strengthening of financial sector, capturing the increased and efficient flow of capital (IMF, 2017). Therefore, the IMF

52 suggests that an increased interest rate spread is a valid predictor of poverty reduction, and declining inequality.

Holding all things constant, Model 2 predicts that each percent of the Gross Regional Product invested in education is expected to increase within-region inequality by 4.1 percentage points. One of the potential explanations for this effect is that increased investment in education can widen intergenerational divide between individuals, and offer more wage premium to the younger population. Due to the limited access to education during the Cultural Revolution (1966-1976), nowadays young professionals occupy most of the high-status managerial positions due to their educational advantage. Moreover, the returns to education depend on the availability of educational institutions in a province and its rank, such that the provinces that have a higher concentration of top- tier universities and schools (e.g. Beijing) will benefit from the increased investment more than the ones that do not (e.g. Hubei). Therefore, the potential for increased investment in education to worsen inequality between regions might be explained by differential access to educational institutions and increased intergenerational inequality.

Furthermore, Model 2 highlights the proportion of higher education graduates in a population as a significant contributor to narrowing the income gap between provinces in a region. The coefficient conveys that as a province shifts from the 10th _{percentile to the}

25th _{percentile in the distribution, within-region income inequality decreases by 8.9}

percentage points, ceteris paribus. Access to postsecondary education has been linked to a series of socially desirable outcomes such as higher incomes, greater job satisfaction, and better voting decisions (Hill, 2015). The author also suggests that widening income gap in the US can be explained by unequal access to education, whereby only wealthy individuals can afford the tuition fee, and enjoy the benefits. While this could also be true

53 in China, I believe that the coefficient reflects the meritocratic aspect of Chinese society, stressing that those who work hard are rewarded. Individuals from low socioeconomic status have the same chance of entering the best university in China as wealthy

individuals, and this equal access to higher education puts downward pressure on within- region income inequality.

Both models have demonstrated consistent regional and time effects. According to Model 2 predictions, inequality in the Eastern region is 301.3 percentage points higher than in the Middle region, and 164.6 percentage points higher than in the Western region, suggesting that inequality between provinces is higher in the more developed regions than in the underdeveloped regions. Furthermore, the values of income inequality have been shown to be 32.7 percentage points higher during the Eleventh FYP when compared to the most recent Twelfth FYP. Based on these results, the inequality has decreased during the years (2006-2010), while no significant difference was observed between inequality in 2001-2005 and 2011-2015, ceteris paribus. Tenth and Eleventh FYP are characterized by a series of strategies that aim to stimulate economic growth in less developed areas. For example, the Western Development strategy (xibu dakaifa) prioritizes the economic advancement of the Middle and

54 the Western regions, and ‘New Socialist Countryside’ (shehui zhuyi xinnongcun) that aims to promote rural sector as a part of a broader ideological campaign that intends to transform China into ‘Universal Society of Moderate Prosperity’ (quanmian jiangshe

xiaokang shehui) by the end of 2020. The

results suggest that the implementation of policies did have a significant influence on between-province income inequality, but the effect was not instantaneous. While these results seem implausibly large, the model pinpoints significant spatial and time effects, suggesting that although the

Chinese government has been taking steps to decrease interregional inequality, spatial differences continue to persist.