ABSTRACT
Introduction This chapter is motivated by three stylized facts for Asia over the past two decades. First, inequality has risen significantly relative to historical trends. As highlighted by the Asian Development Bank (ADB 2012a), more than 80% of Asia’s population now lives in countries where inequality has risen in the past 20 years. Second, rural-urban income gaps in Asia are significant, reflecting the dominance of, but also a changing, dual economic structure in a large part of the region. For example, the rural-urban divide accounts for close to 20% of the economy-wide inequality in Indonesia and the Philippines, 25% in Bhutan, India, and Viet Nam, and 45% in the People’s Republic of China (PRC), and this divide has increased sizably in some countries. Third, urbanization has proceeded apace. Asia’s share of urban population has increased from 40% to 46.2% in the past two decades (ADB 2012b). In the PRC, the share of its urban population increased from 27% in 1990 to 52% in 2012 (World Bank 2012).
