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International financial crisis and wage inequality in urban China

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  • Sui Yang
  • Shi Li

Abstract

The shock of the 2007/2008 international financial crisis had a negative impact on the Chinese economy at its early stage, but the immediate reaction of the Chinese government with a stimulus package of 4 trillion yuan has recovered this economy soon. Since the crisis and the governmental stimulus package have generated different impacts on unemployment and wage growth across regions and industries, it will lead to some changes in the pattern of wage inequality. This paper uses urban household data collected from RUMiC surveys during 2008–2010 to investigate changes in wage growth and inequality in urban China in this period. The findings indicate that the international financial crisis did not have significantly negative impact on wage growth and contributed to narrowing wage inequality in urban China, which was largely due to offsetting effects of the governmental stimulus policies. However, as the impact of the stimulus policies faded and the impact of the international financial crisis worsened, the wage growth experienced a downward trend and wage inequality rose in 2010.

Suggested Citation

  • Sui Yang & Shi Li, 2017. "International financial crisis and wage inequality in urban China," Economic and Political Studies, Taylor & Francis Journals, vol. 5(3), pages 342-357, July.
    • Handle: RePEc:taf:repsxx:v:5:y:2017:i:3:p:342-357
    DOI: 10.1080/20954816.2017.1345169
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    Cited by:

    1. Gustafsson, Björn & Wan, Haiyuan, 2020. "Wage growth and inequality in urban China: 1988–2013," China Economic Review, Elsevier, vol. 62(C).
    2. Chi‐Chur Chao & Mong Shan Ee & Xuan Nguyen & Eden S. H. Yu, 2022. "Minimum wage, firm dynamics, and wage inequality: Theory and evidence​," International Journal of Economic Theory, The International Society for Economic Theory, vol. 18(3), pages 247-271, September.

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