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Evolution of the Industrial Wage Structure in China Since 1980

Author

Listed:
  • Kwon, Ohyun

    (University of Wisconsin-Madison)

  • Fleisher, Belton M.

    () (Ohio State University)

  • Deng, Quheng

    () (Chinese Academy of Social Sciences)

Abstract

Industry mean wages in China have exhibited sharply increased dispersion since the early 1990s. The upward trend in differences of average wages among major industry groups parallels increases in wage and income inequality not only between rural and urban sectors but within the urban economy as well. Research on the trend has focused on (1) how market forces have led to a better match between worker pay and worker skills; on (2a) how the growing share of employment in the private sector has "caused" growing wage inequality; and (2b) how residual government control in a few industrial sectors has contributed to wage inequality due monopoly rent sharing. We show that the industrial wage dispersion in China has evolved to match long-recognized international patterns of industrial wage dispersion and that an increasing proportion of industrial wage dispersion can be explained as returns to observed worker characteristics.

Suggested Citation

  • Kwon, Ohyun & Fleisher, Belton M. & Deng, Quheng, 2011. "Evolution of the Industrial Wage Structure in China Since 1980," IZA Discussion Papers 5880, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp5880
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    References listed on IDEAS

    as
    1. Juan Yang & Sylvie Démurger & Shi Li, 2010. "Earnings Differentials between the Public and the Private Sectors in China : Explaining Changing Trends for Urban Locals in the 2000s," Working Papers 1032, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    2. Zhao Chen & Ming Lu & Guanghua Wan, 2010. "Inter-Industry Wage Differentials: An Increasingly Important Contributor to Urban China Income Inequality," Global COE Hi-Stat Discussion Paper Series gd09-130, Institute of Economic Research, Hitotsubashi University.
    3. Veronique Genre & Karsten Kohn & Daphne Momferatou, 2011. "Understanding inter-industry wage structures in the euro area," Applied Economics, Taylor & Francis Journals, vol. 43(11), pages 1299-1313.
    4. John Whalley & Chunbing Xing, 2010. "The Regional Distribution of Skill Premia in Urban China," NBER Working Papers 16575, National Bureau of Economic Research, Inc.
    5. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-293, March.
    6. Samuel P.S. Ho & Xiao-Yuan Dong & Paul Bowles & Fiona MacPhail, 2002. "Privatization and enterprise wage structures during transition: Evidence from rural industry in china," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 10(3), pages 659-688, November.
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    More about this item

    Keywords

    industry-wage structure; inequality; China;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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