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The contribution of supply and demand shifts to earnings inequality in urban China

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  • Asuyama, Yoko

Abstract

This paper examines the degree to which supply and demand shift across skill groups contributed to the earnings inequality increase in urban China from 1988 to 2002. Product demand shift contributed to an equalizing of earnings distribution in urban China from 1988 to 1995 by increasing the relative product for the low educated. However, it contributed to enlarging inequality from 1995 to 2002 by increasing the relative demand for the highly educated. Relative demand was continuously higher for workers in the coastal region and contributed to a raising of interregional inequality. Supply shift contributed essentially nothing or contributed only slightly to a reduction in inequality. Remaining factors, the largest disequalizer, may contain skill-biased technological and institutional changes, and unobserved supply shift effects due to increasing numbers of migrant workers.

Suggested Citation

  • Asuyama, Yoko, 2008. "The contribution of supply and demand shifts to earnings inequality in urban China," IDE Discussion Papers 177, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  • Handle: RePEc:jet:dpaper:dpaper177
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    File URL: https://ir.ide.go.jp/?action=repository_action_common_download&item_id=37990&item_no=1&attribute_id=22&file_no=1
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    More about this item

    Keywords

    China; Income distribution; Labor market; Urban societies; Earnings inequality; Inequality decomposition; 中国; 所得分配; 労働市場; 都市社会; 所得格差; 不平等度の分解; 格差尺度の分解;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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