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Residual Wage Inequality in Urban China, 1995-2007

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  • Xing, Chunbing

    ()
    (Beijing Normal University)

Abstract

We use three waves of urban household survey data from 1995 to 2007 to investigate the trends of residual inequality and its determinants. First, we describe the change of overall and residual wage inequality over time. One important new pattern is that the rise in both the overall and residual inequality mainly happened at the upper half of the wage distributions (i.e. the rich are getting relatively much richer) from 2002 to 2007. From 1995 to 2002, however, it is truer to say that the poor are getting relatively much poorer. Second, by using two complementary semi-parametric methods, we find that the composition effect is negligible. Instead, the change in skill prices plays a dominant role in the rise of residual inequality. Finally, by constructing a panel data at the city level, we find that ownership restructuring is an important factor that has caused the skill price to rise, especially in the earlier period. Another finding is that China’s export share of GDP has a positive effect on the enlargement of the upper half distributions. This effect is more significant in the latter period from 2002 to 2007, highlighting the impact of China’s entry into the WTO.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5003.

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Length: 39 pages
Date of creation: Jun 2010
Date of revision:
Publication status: published in: China Economic Review, 2012, 23(2), 205-222.
Handle: RePEc:iza:izadps:dp5003

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Keywords: decomposition; residual inequality; urban China;

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Cited by:
  1. Gabriel J. Felbermayr & Giammario Impullitti & Julien Prat, 2014. "Firm Dynamics and Residual Inequality in Open Economies," CESifo Working Paper Series 4666, CESifo Group Munich.
  2. Démurger, Sylvie & Li, Shi & Yang, Juan, 2012. "Earnings differentials between the public and private sectors in China: Exploring changes for urban local residents in the 2000s," China Economic Review, Elsevier, vol. 23(1), pages 138-153.
  3. Cui, Yuling & Nahm, Daehoon & Tani, Massimiliano, 2013. "Earnings Differentials and Returns to Education in China, 1995-2008," IZA Discussion Papers 7349, Institute for the Study of Labor (IZA).
  4. Xing, Chunbing, 2011. "Changes in Job Structure and Rising Wage Inequality in Urban China, 1995-2007," IZA Discussion Papers 6184, Institute for the Study of Labor (IZA).
  5. Zhong Zhao & Zhaopeng Qu, 2013. "Wage Inequality of Chinese Rural-Urban Migrants Between 2002 and 2007," Working Papers PMMA, PEP-PMMA 2013-04, PEP-PMMA.

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