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The Value of Power in China: How Do Party Membership and Social Networks Affect Pay in Different Ownership Sectors?

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  • Shuang LI
  • Ming LU
  • Hiroshi Sato

Abstract

Party membership and social networks, as two forms of nonmarket power, have significant effects on personal income. Do the effects vary across different ownership sectors (suoyouzhi xingzhi)? Using a nationally representative survey of urban households (China Household Income Project surveys in 1995 and 2002), we find that (1) party membership can significantly increase personal income, but this effect does not significantly differ between different ownership sectors or between the years 1995 and 2002 and (2) social networks are insignificant in State-Owned Enterprises (SOEs), while they contribute significantly to personal income in non-SOE sectors.

Suggested Citation

  • Shuang LI & Ming LU & Hiroshi Sato, 2008. "The Value of Power in China: How Do Party Membership and Social Networks Affect Pay in Different Ownership Sectors?," Global COE Hi-Stat Discussion Paper Series gd08-011, Institute of Economic Research, Hitotsubashi University.
  • Handle: RePEc:hst:ghsdps:gd08-011
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    File URL: http://gcoe.ier.hit-u.ac.jp/research/discussion/2008/pdf/gd08-011.pdf
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    References listed on IDEAS

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    1. John Knight & Linda Yueh, 2002. "The Role of Social Capital in the Labour Market in China," Economics Series Working Papers 121, University of Oxford, Department of Economics.
    2. Niny Khor & John Pencavel, 2006. "Income mobility of individuals in China and the United States," The Economics of Transition, The European Bank for Reconstruction and Development, pages 417-458.
    3. Ding, Ning & Wang, Yougui, 2008. "Household income mobility in China and its decomposition," China Economic Review, Elsevier, vol. 19(3), pages 373-380, September.
    4. Philippe Van Kerm, 2004. "What Lies Behind Income Mobility? Reranking and Distributional Change in Belgium, Western Germany and the USA," Economica, London School of Economics and Political Science, vol. 71(281), pages 223-239, May.
    5. Charles Leung & Youngman Leong & Siu Wong, 2006. "Housing Price Dispersion: An Empirical Investigation," The Journal of Real Estate Finance and Economics, Springer, pages 357-385.
    6. Yannis M. Ioannides & Linda Datcher Loury, 2004. "Job Information Networks, Neighborhood Effects, and Inequality," Journal of Economic Literature, American Economic Association, pages 1056-1093.
    7. Yannis M. Ioannides & Linda Datcher Loury, 2004. "Job Information Networks, Neighborhood Effects, and Inequality," Journal of Economic Literature, American Economic Association, pages 1056-1093.
    8. Li, Hongbin & Zhang, Junsen & Sin, Lai Ting & Zhao, Yaohui, 2006. "Relative earnings of husbands and wives in urban China," China Economic Review, Elsevier, pages 412-431.
    9. Appleton, Simon & Song, Lina & Xia, Qingjie, 2005. "Has China crossed the river? The evolution of wage structure in urban China during reform and retrenchment," Journal of Comparative Economics, Elsevier, pages 644-663.
    10. John Knight & Linda Yueh, 2008. "The role of social capital in the labour market in China," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 16(3), pages 389-414, July.
    11. Zhang, Junsen & Zhao, Yaohui & Park, Albert & Song, Xiaoqing, 2005. "Economic returns to schooling in urban China, 1988 to 2001," Journal of Comparative Economics, Elsevier, pages 730-752.
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    Cited by:

    1. Shiqing Jiang & Ming Lu & Hiroshi Sato, 2009. "Happiness in the Dual Society of Urban China: Hukou Identity, Horizontal Inequality and Heterogeneous," Global COE Hi-Stat Discussion Paper Series gd08-020, Institute of Economic Research, Hitotsubashi University.
    2. Fukao, Kyoji & Wu, Harry X. & Yuan, Tangjun, 2009. "Comparative Output and Labour Productivity in Manufacturing for China, Japan, Korea and the United States in Circa 1935 by a Production PPP Approach," CEI Working Paper Series 2008-26, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    3. Shiqing Jiang & Ming Lu & Hiroshi Sato, 2008. "Happiness in the dual society of urban China:Hukou identity, horizontal inequality and heterogeneous reference," LICOS Discussion Papers 22308, LICOS - Centre for Institutions and Economic Performance, KU Leuven.

    More about this item

    Keywords

    Income; Party membership; Social networks; Ownership; Maketization;

    JEL classification:

    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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