This paper examines the degree to which supply and demand shift across skill groups contributed to the earnings inequality increase in urban China from 1988 to 2002. Product demand shift contributed to an equalizing of earnings distribution in urban China from 1988 to 1995 by increasing the relative product demand for the low educated. However, it contributed to enlarging inequality from 1995 to 2002 by increasing the relative product demand for the highly educated. Relative product demand was continuously higher for workers in the coastal region and contributed to a raising of interregional inequality. Supply shift contributed essentially nothing or contributed only slightly to a reduction in inequality. Remaining factors, the largest disequalizer, may contain skill-biased technological and institutional changes, and unobserved supply shift effects due to increasing numbers of migrant workers.
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Paper provided by Institute of Developing Economies, Japan External Trade Organization(JETRO) in its series IDE Discussion Papers with number
177.
Length: Date of creation: Oct 2008 Date of revision: Publication status: Published in IDE Discussion Paper. No. 177. 2008.10 Handle: RePEc:jet:dpaper:dpaper177
Find related papers by JEL classification: D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
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