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 quantile decompositions at different points of the wage distribution. The initial wage differential in favour 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 favour of this country for the first half of the wage distribution.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3284.
Length: 22 pages
Date of creation: Jan 2008
Date of revision:
Publication status: published in: Review of Income and Wealth, 2009, 55(1), 562-587 [Details & Download]
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Other versions of this item:
- Olivier Bargain & Sumon Kumar Bhaumik & Manisha Chakrabarty & Zhong Zhao, 2009. "Earnings Differences Between Chinese And Indian Wage Earners, 1987-2004," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(s1), pages 562-587, 07.
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-02-02 (All new papers)
- NEP-CNA-2008-02-02 (China)
- NEP-CWA-2008-02-02 (Central & Western Asia)
- NEP-DEV-2008-02-02 (Development)
- NEP-LAB-2008-02-02 (Labour Economics)
- NEP-TRA-2008-02-02 (Transition Economics)
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