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The Effects of the State Sector on Wage Inequality in Urban China: 1988–2007

Author

Listed:
  • Xia, Qingjie

    () (Peking University)

  • Song, Lina

    () (University of Nottingham)

  • Li, Shi

    () (Beijing Normal University)

  • Appleton, Simon

    () (University of Nottingham)

Abstract

This paper examines the effects of state sector domination on wage inequality in urban China. Using Chinese Household Income Project surveys, we conduct two exercises: with quantile regression analysis, we identify wage gaps across the distribution and over time; and we employ the Machado and Mata (2005) decomposition to investigate how urban wage inequality was affected by the changes in wage structure and employment share of the state sector. We find that since the radical state sector reforms designed to reduce over-staffing and improve efficiency since the late 1990s, urban wage gaps were narrowed due to the reduction of employment share in the state sector; the wage premium of the state sector in comparison with the non-state sector increased significantly; and changes in the wage structure of the labour market caused the rise in urban wage inequality.

Suggested Citation

  • Xia, Qingjie & Song, Lina & Li, Shi & Appleton, Simon, 2013. "The Effects of the State Sector on Wage Inequality in Urban China: 1988–2007," IZA Discussion Papers 7142, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp7142
    as

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    References listed on IDEAS

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    1. Sims,Christopher A. (ed.), 1994. "Advances in Econometrics," Cambridge Books, Cambridge University Press, number 9780521444606, October.
    2. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters,in: Schooling, Experience, and Earnings, pages 1-4 National Bureau of Economic Research, Inc.
    3. Meng,Xin, 2009. "Labour Market Reform in China," Cambridge Books, Cambridge University Press, number 9780521121118, October.
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    13. Koenker, Roger & Bassett, Gilbert, Jr, 1982. "Robust Tests for Heteroscedasticity Based on Regression Quantiles," Econometrica, Econometric Society, vol. 50(1), pages 43-61, January.
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    Cited by:

    1. Clemens Fuest & Li Liu, 2015. "Does Ownership Affect the Impact of Taxes on Firm Behavior? Evidence from China," CESifo Working Paper Series 5316, CESifo Group Munich.
    2. Qi, Di & Wu, Yichao, 2016. "The extent and risk factors of child poverty in urban China — What can be done for realising the Chinese government goal of eradicating poverty before 2020," Children and Youth Services Review, Elsevier, vol. 63(C), pages 74-82.
    3. Song, Lina & Appleton, Simon & Liang, Zhe, 2016. "Deconstructing Informality: A Response to Vulnerability or an Optimal Choice?," IZA Discussion Papers 10100, Institute for the Study of Labor (IZA).
    4. Ma, Yuanyuan & Walsh, Patrick Paul, 2013. "Party Membership and State Jobs in Urban China," IZA Discussion Papers 7643, Institute for the Study of Labor (IZA).
    5. Christopher Candelaria & Mary Daly & Galina Hale, 2015. "Persistence of Regional Wage Differences in China," Pacific Economic Review, Wiley Blackwell, vol. 20(3), pages 365-387, August.
    6. repec:tpr:asiaec:v:16:y:2017:i:2:p:167-184 is not listed on IDEAS
    7. Kritkorn Nawakitphaitoon & Xuan Chen & Yuhao Ge, 2016. "State and Non-state Earnings Differentials over Time in China’s Urban Labor Market: Evidence from the Urban Household Survey (1994–2007)," Journal of Labor Research, Springer, vol. 37(3), pages 287-316, September.

    More about this item

    Keywords

    China; state sector; wage inequality; quantile regression; counterfactual analysis;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population

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