This dissertation reviews the changes of Chinese social benefit system since the early 1980s and provides empirical evidence on the levels of social benefits and their impacts on income inequality in urban and rural areas using the national China Household Income Project (CHIP) 1988 and 2002 data.; The urban social benefit system has transited from its original massive provision to a residual role since the early 1980s. Housing and other in-kind benefits from work units have been hugely cut back and food assistance has been almost eliminated, while cash transfer programs have been strengthened. Although the level of social benefits that urban families received increased during the period, their share out of household post-tax post-transfer income shrank from 45% in 1988 to 30% in 2002.; The urban total social benefits strongly targeted the bottom pre-tax pre-transfer income decile. Cash transfers were negatively associated with pre-tax pre-transfer income distribution in both years, while important in-kind benefits---namely health and food in 1988 and education in 2002---were positively related to pre-tax pre-transfer income levels. The presence of elder members and higher education levels were significantly related to more total social benefits. The urban social benefits played a significant role in income inequality reduction in both 1988 and 2002. However, the social benefit transfers were not able to close the rising income gap driven by growing market income inequality during the period. As a result, post-tax post-transfer income inequality level was still higher in 2002 than in 1988.; The rural social benefit system has always been marginal in coverage and minimal in magnitude. Housing has been the most predominant social benefit toward the rural residents because of their free access to the housing base land. Several public assistance programs aim at providing cash or in-kind supports to the very vulnerable. The level of rural social benefits increased during the period, constituting 11% and 19% of household post-tax post-transfer income in 1988 and 2002, respectively. This is mainly due to the increased housing prices since the economic reforms. The rural residents received minimal cash transfers, health, food, and other in-kind benefits in both years.; Social benefits in rural China were redistributed largely regressively along the pre-tax pre-transfer income distribution. The rural social benefit system also favored those with more advantaged socio-economic background such as higher education, non-farm sector employment, Communist Party membership, and smaller household sizes. The rural social benefits had little impact on income inequality reduction in both years. Post-tax post-transfer income was distributed more unequally in 2002 than in 1988, driven by the growing market income inequality during the period.; The urban-rural disparity in social benefits persisted. Rural residents on average only enjoyed less than half post-tax post-transfer income of that of the urban residents and the gap was even enlarged from 1988 to 2002. Moreover, the rural residents received much smaller doses---both in absolute values and as a proportion of post-tax post-transfer household income---of social benefits relative to their urban peers. (Abstract shortened by UMI.)
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