The anatomy of rising earnings inequality in urban China

A labor market is beginning to emerge in urban China during a period of rap id growth and changed labor supply. In this paper, we investigate how earni ngs inequality and relative earnings have changed between 1988 and 1995 usi ng two large samples covering LO provinces. The results verify that, as exp ected. earnings inequality has increased rapidly. The expansion can be trac ed to two components, the basic wage and subsidies. The analysis shows that the growth in earnings inequality is not limited to certain segments of th e labor force but affects all categories as defined by ownership sector, re gion, and education. J. Comp. Econ., March 2001, 29(1), pp. 118-135. Depart ment of Social Work, University of Goteborg, P.O. Box 720, SE 405 30 Gotebo rg, Sweden; and institute for the Study of Labor (IZA), Bonn, Germany; and Institute of Economics, Chinese Academy of Social Sciences, 2 Yuetan Beixia ojie. Beijing, People's Republic of China. (C) 2001 Academic Press.