A national urban household survey for China in 1986 is analyzed to examine the determinants and the extent of income inequality. The influence of age, education, occupation, ownership category, sex, region, and their various inter-relationships are studied. Estimates of income inequality among household heads are also made. By presenting a blend of institutional and statistical analysis, the emphasis throughout is placed on explanation. By international standard, the urban wage structure in China is extremely compressed. This reflects the egalitarian objectives and interventionist instruments of government. Yet in some of the results the Chinese employment system is found to mimic a labor market. Policy implications are drawn. Copyright 1991 by Blackwell Publishing Ltd
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