What Lies behind Rising Earnings Inequality in Urban China? Regression-based Decompositions
AbstractCoupled with advances in enterprise reform and changes in the wage structure, earnings inequality in urban China has been increasing, and this has contributed significantly to rising income inequality. Using urban household survey data from the 1988, 1995 and 2002 waves of the China Household Income Project, in this paper, we decompose earnings inequality in urban China by using the regression-based decomposition methods developed by Fields (1998), Morduch and Sicular (2002) and Shorrocks (1999). The decomposition results indicate that the effects of gender and membership of the Communist Party of China on earnings inequality have changed little. While work experience had a reduced effect on earnings inequality, the effects of education and occupation have increased. The contributions of ownership status and industry to earnings inequality have increased. Regional effects have been the largest recent contributor to earnings inequality.
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Bibliographic InfoPaper provided by Institute of Economic Research, Hitotsubashi University in its series Global COE Hi-Stat Discussion Paper Series with number gd08-021.
Date of creation: Jan 2009
Date of revision:
earnings inequality; regression-based decompositions; urban China;
Other versions of this item:
- Quheng Deng & Shi Li, 2009. "What Lies behind Rising Earnings Inequality in Urban China? Regression-based Decompositions," CESifo Economic Studies, CESifo, vol. 55(3-4), pages 598-623.
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-01-24 (All new papers)
- NEP-CNA-2009-01-24 (China)
- NEP-DEV-2009-01-24 (Development)
- NEP-LAB-2009-01-24 (Labour Economics)
- NEP-TRA-2009-01-24 (Transition Economics)
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