Human capital and income inequality in China: an ARDL analysis.

This paper examines the dynamic relationship between human capital and income inequality in China over the period 1990–2023 using an ARDL–ECM framework. Income inequality (GINI) is modeled as a function of human capital, economic growth, trade openness, financial development, and governance quality. Bounds testing confirms a stable long-run cointegrating relationship across the full sample period. The long-run estimates show that human capital has a strong inequality-reducing effect, whereas trade openness and financial development significantly increase inequality; growth and governance have no robust direct impact once structural factors are controlled for. Short-run results indicate that positive shocks to human capital can temporarily widen inequality, while about 59% of any deviation from the long-run equilibrium is corrected within one period. These findings fill a gap in single-country longtime series evidence and highlight the need to coordinate human-capital policies with trade, financial, and governance reforms under China’s high-quality development and common prosperity agenda.