The anatomy of rising earnings inequality in urban China

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