Reexamining the income inequality in China: Evidence from sequential panel selection method

► We test the income convergence properties of 31 regions in China from 1979 to 2010. ► We propose a novel approach using panel KSS test with a Fourier function. ► We control for structural breaks, nonlinearity, and cross-sectional dependency. ► The real GDP per capita diverges in 20 out of the 31 regions in China. ► The evidence of income divergence has important policy implications for China.