IDEAS home Printed from https://ideas.repec.org/p/mos/moswps/2014-01.html
   My bibliography  Save this paper

Who Gets Money First? Monetary Expansion, Ownership Structure and Wage Inequality in China

Author

Listed:
  • Peiwen Bai
  • Wenli Cheng

Abstract

With the help of a simple model this paper formulates a hypothesis that a monetary expansion in the Chinese context of a segmented labor market has the effect of widening the wage gap between state and non-state workers. We argue that the reason for the increase in wage differential is that SOEs are in a privileged position to receive new money first which means the wage rate of SOE workers are raised first. It is only after the new money reaches the non-state sector via spending, does the wage rate of non-state workers rise with a delay and probably to a lesser extent. Our empirical analysis based on 10 sectors in China over the period 1990 to 2011 supports our hypothesis.

Suggested Citation

  • Peiwen Bai & Wenli Cheng, 2014. "Who Gets Money First? Monetary Expansion, Ownership Structure and Wage Inequality in China," Monash Economics Working Papers 01-14, Monash University, Department of Economics.
  • Handle: RePEc:mos:moswps:2014-01
    as

    Download full text from publisher

    File URL: http://www.buseco.monash.edu.au/eco/research/papers/2014/0114moneybaicheng.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Jordi Brandts & Gary Charness, 2011. "The strategy versus the direct-response method: a first survey of experimental comparisons," Experimental Economics, Springer;Economic Science Association, vol. 14(3), pages 375-398, September.
    2. Frey, Bruno S & Oberholzer-Gee, Felix, 1997. "The Cost of Price Incentives: An Empirical Analysis of Motivation Crowding-Out," American Economic Review, American Economic Association, vol. 87(4), pages 746-755, September.
    3. Klaus Abbink & Jordi Brandts & Benedikt Herrmann & Henrik Orzen, 2010. "Intergroup Conflict and Intra-group Punishment in an Experimental Contest Game," American Economic Review, American Economic Association, pages 420-447.
    4. Amegashie, J. Atsu, 2013. "Consumers' Complaints, the Nature of Corruption, and Social Welfare," MPRA Paper 47215, University Library of Munich, Germany.
    5. Aaron Lowen & Andrew Samuel, 2012. "Bribery and Endogenous Monitoring Effort: An Experimental Study," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 38(3), pages 356-380.
    6. Basu, Kaushik, 2011. "Why, for a Class of Bribes, the Act of Giving a Bribe should be Treated as Legal," MPRA Paper 50335, University Library of Munich, Germany.
    7. Jose Apesteguia & Martin Dufwenberg & Reinhard Selten, 2007. "Blowing the Whistle," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 31(1), pages 143-166, April.
    8. Klaus Abbink & Bernd Irlenbusch & Elke Renner, 2002. "An Experimental Bribery Game," Journal of Law, Economics, and Organization, Oxford University Press, vol. 18(2), pages 428-454, October.
    9. Lambsdorff, Johann Graf & Frank, Björn, 2010. "Bribing versus gift-giving - An experiment," Journal of Economic Psychology, Elsevier, vol. 31(3), pages 347-357, June.
    10. Schickora, Jan Theodor, 2011. "Bringing the Four-Eyes-Principle to the Lab," Discussion Papers in Economics 12160, University of Munich, Department of Economics.
    11. Klaus Abbink & Heike Hennig-Schmidt, 2006. "Neutral versus loaded instructions in a bribery experiment," Experimental Economics, Springer;Economic Science Association, vol. 9(2), pages 103-121, June.
    12. Rose-Ackerman, Susan, 1975. "The economics of corruption," Journal of Public Economics, Elsevier, vol. 4(2), pages 187-203, February.
    13. Abigail Barr & Danila Serra, 2009. "The effects of externalities and framing on bribery in a petty corruption experiment," Experimental Economics, Springer;Economic Science Association, vol. 12(4), pages 488-503, December.
    14. Christoph Engel & Sebastian Goerg & Gaoneng Yu, 2012. "Symmetric vs. Asymmetric Punishment Regimes for Bribery," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2012_01, Max Planck Institute for Research on Collective Goods, revised May 2013.
    15. Klaus Abbink, 2006. "Laboratory Experiments on Corruption," Chapters,in: International Handbook on the Economics of Corruption, chapter 14 Edward Elgar Publishing.
    16. Cameron, Lisa & Chaudhuri, Ananish & Erkal, Nisvan & Gangadharan, Lata, 2009. "Propensities to engage in and punish corrupt behavior: Experimental evidence from Australia, India, Indonesia and Singapore," Journal of Public Economics, Elsevier, vol. 93(7-8), pages 843-851, August.
    17. Danila Serra, 2012. "Combining Top-Down and Bottom-Up Accountability: Evidence from a Bribery Experiment," Journal of Law, Economics, and Organization, Oxford University Press, vol. 28(3), pages 569-587, August.
    18. Spagnolo, Giancarlo & Dufwenberg, Martin, 2011. "Legalizing Bribes," SITE Working Paper Series 13, Stockholm School of Economics, Stockholm Institute of Transition Economics, revised 12 May 2013.
    19. Vivi Alatas & Lisa Cameron & Ananish Chaudhuri & Nisvan Erkal & Lata Gangadharan, 2009. "Gender, Culture, and Corruption: Insights from an Experimental Analysis," Southern Economic Journal, Southern Economic Association, vol. 75(3), pages 663-680, January.
    20. Vivi Alatas & Lisa Cameron & Ananish Chaudhuri & Nisvan Erkal & Lata Gangadharan, 2009. "Subject pool effects in a corruption experiment: A comparison of Indonesian public servants and Indonesian students," Experimental Economics, Springer;Economic Science Association, vol. 12(1), pages 113-132, March.
    21. Bigoni, Maria & Fridolfsson, Sven-Olof & Le Coq, Chloé & Spagnolo, Giancarlo, 2008. "Fines, Leniency and Rewards in Antitrust: An Experiment," Working Paper Series 738, Research Institute of Industrial Economics, revised 06 Aug 2009.
    22. Abbink, Klaus, 2004. "Staff rotation as an anti-corruption policy: an experimental study," European Journal of Political Economy, Elsevier, vol. 20(4), pages 887-906, November.
    23. Banuri, Sheheryar & Eckel, Catherine, 2012. "Experiments in culture and corruption : a review," Policy Research Working Paper Series 6064, The World Bank.
    24. Graf Lambsdorff, Johann & Fink, Hady, 2006. "Combating corruption in Colombia: Perceptions and achievements," Passauer Diskussionspapiere, Volkswirtschaftliche Reihe V-44-06, University of Passau, Faculty of Business and Economics.
    25. Jeffrey A. Miron, 1997. "The Effects of Alcohol Prohibition on Alcohol Consumption," Papers 0078, Boston University - Industry Studies Programme.
    26. Pranab Bardhan, 1997. "Corruption and Development: A Review of Issues," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1320-1346, September.
    27. Jana Krajcova & Andreas Ortmann, 2008. "Testing Leniency Programs Experimentally: The Impact of “Natural” Framing," CERGE-EI Working Papers wp372, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    28. Van Rijckeghem, Caroline & Weder, Beatrice, 2001. "Bureaucratic corruption and the rate of temptation: do wages in the civil service affect corruption, and by how much?," Journal of Development Economics, Elsevier, vol. 65(2), pages 307-331, August.
    29. Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 681-712.
    30. Björn Frank & Johann Graf Lambsdorff & Frédéric Boehm, 2011. "Gender and Corruption: Lessons from Laboratory Corruption Experiments," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 23(1), pages 59-71, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:spr:soinre:v:134:y:2017:i:2:d:10.1007_s11205-016-1435-x is not listed on IDEAS

    More about this item

    Keywords

    monetary expansion; labor market segmentation; wage differential between state and non-state workers in China;

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mos:moswps:2014-01. 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: (Simon Angus). General contact details of provider: http://edirc.repec.org/data/dxmonau.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.