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

Qingjie Xia, Lina Song, Shi Li () and Simon Appleton

No 7142, IZA Discussion Papers from Institute of Labor Economics (IZA)

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.

Keywords: China; state sector; wage inequality; quantile regression; counterfactual analysis (search for similar items in EconPapers)
JEL-codes: J31 J42 O15 P23 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2013-01
New Economics Papers: this item is included in nep-cna, nep-dev, nep-lma, nep-ltv and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Published - published in: Journal of Chinese Economic and Business Studies, 2014, 12(1), 29-45

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Journal Article: The effect of the state sector on wage inequality in urban China: 1988--2007 (2014)
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