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Nonagricultural Employment Determinants and Income Inequality Decomposition

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  • Xiaoyun Liu
  • Terry Sicular

Abstract

Nonagricultural income has become an important source of rural household income in China and has brought about wide inequality in rural areas. This paper investigates the determinants of nonagricultural employment and income and how they contribute to income inequality using the China Household Income Project (CHIP) 2002 survey data and a three-step decomposition approach. Our results indicate that educational inequality accounts for 9 percent and 36 percent, respectively, of wage and self-employment income inequality, implying that educational inequality plays a substantial role in nonagricultural income inequality. The results also show that community characteristics explain much inequality in wage and self-employment income, indicating that local development is important in the determination of nonagricultural income inequality.

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Bibliographic Info

Article provided by M.E. Sharpe, Inc. in its journal Chinese Economy.

Volume (Year): 42 (2009)
Issue (Month): 4 (July)
Pages: 29-43

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Handle: RePEc:mes:chinec:v:42:y:2009:i:4:p:29-43

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Web page: http://mesharpe.metapress.com/link.asp?target=journal&id=110901

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  1. de Brauw, Alan & Huang, Jikun & Rozelle, Scott & Zhang, Linxiu & Zhang, Yigang, 2002. "The Evolution of China's Rural Labor Markets During the Reforms," Journal of Comparative Economics, Elsevier, vol. 30(2), pages 329-353, June.
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  3. meng, xin & wu, harry, 1994. "Household Income Determination and Regional Income Differential in Rural China," MPRA Paper 1345, University Library of Munich, Germany.
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  8. Fields, Gary S & Yoo, Gyeongjoon, 2000. "Falling Labor Income Inequality in Korea's Economic Growth: Patterns and Underlying Causes," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 46(2), pages 139-59, June.
  9. Jonathan Morduch & Terry Sicular, 2002. "Rethinking Inequality Decomposition, With Evidence from Rural China," Economic Journal, Royal Economic Society, vol. 112(476), pages 93-106, January.
  10. Puhani, Patrick A, 2000. " The Heckman Correction for Sample Selection and Its Critique," Journal of Economic Surveys, Wiley Blackwell, vol. 14(1), pages 53-68, February.
  11. Christofides, Louis N. & Pashardes, Panos, 2002. "Self/paid-employment, public/private sector selection, and wage differentials," Labour Economics, Elsevier, vol. 9(6), pages 737-762, December.
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Cited by:
  1. Chloe Duvivier & Mary-Françoise Renard & Shi Li, 2012. "Are workers close to cities paid higher non-agricultural wages in rural China?," Working Papers halshs-00673698, HAL.
  2. Tsun Se Cheong & Yanrui Wu, 2013. "Globalization and Regional Inequality," Economics Discussion / Working Papers 13-10, The University of Western Australia, Department of Economics.

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