Persistence of Regional Inequality in China

Christopher Candelaria, Mary Daly and Galina Hale

No 2013-06, Working Paper Series from Federal Reserve Bank of San Francisco

Abstract: Regional inequality in China appears to be persistent and even growing in the last two decades. We study potential explanations for this phenomenon. After making adjustments for the difference in the cost of living across provinces, we find that some of the inequality in real wages could be attributed to differences in quality of labor, industry composition, labor supply elasticities, and geographical location of provinces. These factors, taken together, explain about half of the cross-province real wage difference. Interestingly, we find that inter-province redistribution did not help offset regional inequality during our sample period. We also demonstrate that inter-province migration, while driven in part by levels and changes in wage differences across provinces, does not offset these differences. These results imply that cross-province labor market mobility in China is still limited, which contributes to the persistence of cross-province wage differences.

Keywords: China; Wages; Labor market; Labor supply (search for similar items in EconPapers)
Pages: 33 pages
Date: 2013-03-25
New Economics Papers: this item is included in nep-cna, nep-geo, nep-lma, nep-ltv, nep-tra and nep-ure
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedfwp:2013-06

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DOI: 10.24148/wp2013-06

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