Earnings Differences Between Chinese And Indian Wage Earners, 1987-2004
AbstractThis paper is one of the first comprehensive attempts to compare earnings in urban China and India over the recent period. While both economies have grown considerably, we illustrate significant cross-country differences in wage growth since the late 1980s. For this purpose, we make use of comparable datasets, estimate Mincer equations and perform Oaxaca-Blinder decompositions at the mean and at different points of the wage distribution. The initial wage differential in favor of Indian workers, observed in the middle and upper part of the distribution, partly disappears over time. While the 1980s Indian premium is mainly due to higher returns to education and experience, a combination of price and endowment effects explains why Chinese wages have caught up, especially since the mid-1990s. The price effect is only partly explained by the observed convergence in returns to education; the endowment effect is driven by faster increase in education levels in China and significantly accentuates the reversal of the wage gap in favor of this country for the first half of the wage distribution. Copyright 2009 The Authors. Journal compilation International Association for Research in Income and Wealth 2009.
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Bibliographic InfoArticle provided by International Association for Research in Income and Wealth in its journal Review of Income and Wealth.
Volume (Year): 55 (2009)
Issue (Month): s1 (07)
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- Bargain, Olivier & Bhaumik, Sumon K. & Chakrabarty, Manisha & Zhao, Zhong, 2008. "Earnings Differences between Chinese and Indian Wage Earners, 1987–2004," IZA Discussion Papers 3284, Institute for the Study of Labor (IZA).
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
- P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies
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