Abstract
This empirical study shows that trade unions in China do not play a significant role in affecting industrial labor income. Inactive trade unions, moreover, contribute to the deterioration of income inequality because of the existence of administrative monopoly power. China's dual market structure (i.e., the coexistence of an administrative monopoly sector and nonadministrative monopoly sector), as well as the trade unions' administrativization and bureaucratization, are main reasons that trade unions do not effectively improve China's income distribution problem. Thus, in order to optimize the structure of income distribution, trade unions in China should start a reform of de‐administrativization, reconstruction of the function of workers' rights protection, and strengthening the independence of the grassroots trade union organizations.
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