Earnings Differences between Chinese and Indian Wage Earners, 1987–2004
This 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.
|Date of creation:||Jan 2008|
|Date of revision:|
|Publication status:||published in: Review of Income and Wealth, 2009, 55(1), 562-587 [Details & Download]|
|Contact details of provider:|| Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany|
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
|Order Information:|| Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Amanda Gosling & Stephen Machin & Costas Meghir, 1994.
"The changing distribution of male wages in the UK,"
IFS Working Papers
W94/13, Institute for Fiscal Studies.
- Amanda Gosling & Stephen Machin & Costas Meghir, 2000. "The Changing Distribution of Male Wages in the U.K," Review of Economic Studies, Oxford University Press, vol. 67(4), pages 635-666.
- Jim Albrecht & Aico van Vuuren & Susan Vroman, 2007.
"Counterfactual Distributions with Sample Selection Adjustments: Econometric Theory and an Application to the Netherlands,"
gueconwpa~07-07-06, Georgetown University, Department of Economics.
- Albrecht, James & van Vuuren, Aico & Vroman, Susan, 2009. "Counterfactual distributions with sample selection adjustments: Econometric theory and an application to the Netherlands," Labour Economics, Elsevier, vol. 16(4), pages 383-396, August.
- David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2005.
"Rising Wage Inequality: The Role of Composition and Prices,"
Harvard Institute of Economic Research Working Papers
2096, Harvard - Institute of Economic Research.
- David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2005. "Rising Wage Inequality: The Role of Composition and Prices," NBER Working Papers 11628, National Bureau of Economic Research, Inc.
- Geeta Gandhi Kingdon & Jeemol Unni, 2001. "Education and Women's Labour Market Outcomes in India," Education Economics, Taylor & Francis Journals, vol. 9(2), pages 173-195.
- Saha, Bibhas & Sarkar, Subrata, 1999. "Schooling, Informal Experience, and Formal Sector Earnings: A Study of Indian Workers," Review of Development Economics, Wiley Blackwell, vol. 3(2), pages 187-99, June.
- Melly, Blaise, 2005. "Decomposition of differences in distribution using quantile regression," Labour Economics, Elsevier, vol. 12(4), pages 577-590, August.
- Byron, Rayond P & Manaloto, Evelyn Q, 1990. "Returns to Education in China," Economic Development and Cultural Change, University of Chicago Press, vol. 38(4), pages 783-96, July.
- Barry Bosworth & Susan M. Collins, 2008.
"Accounting for Growth: Comparing China and India,"
Journal of Economic Perspectives,
American Economic Association, vol. 22(1), pages 45-66, Winter.
- James Albrecht & Anders Bjorklund & Susan Vroman, 2003.
"Is There a Glass Ceiling in Sweden?,"
Journal of Labor Economics,
University of Chicago Press, vol. 21(1), pages 145-177, January.
- José Mata & José A. F. Machado, 2005. "Counterfactual decomposition of changes in wage distributions using quantile regression," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(4), pages 445-465.
- Fields,Gary S., 2005. "A guide to multisector labor market models," Social Protection and Labor Policy and Technical Notes 32547, The World Bank.
- François Bourguignon & Ferreira Francisco H. G. & Philippe G. Leite, 2008.
"Beyond Oaxaca-Blinder: Accounting for differences in household income distributions,"
- François Bourguignon & Francisco Ferreira & Phillippe Leite, 2008. "Beyond Oaxaca–Blinder: Accounting for differences in household income distributions," Journal of Economic Inequality, Springer, vol. 6(2), pages 117-148, June.
- Steve Dowrick & Muhammad Akmal, 2005. "Contradictory Trends In Global Income Inequality: A Tale Of Two Biases," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 51(2), pages 201-229, 06.
- John Knight & Lina Song, 2003. "Increasing urban wage inequality in China," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 11(4), pages 597-619, December.
When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp3284. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak)
If references are entirely missing, you can add them using this form.