Political background and its influences on wage gaps: Evidence from China

Abstract

Using the data from the Chinese Household Income Project Survey and the decomposition method, this study investigates the determinants of the wage gap between members and non-members of the Communist Party of China (CPC) from 2002–2018. There were three new findings. First, the endowment difference component (especially education) is the main contributing factor to the wage gap between CPC members and non-members in 2002, 2013, and 2018. Second, the discrimination against CPC non-members decreased, whereas that of human capital increased from 2002 to 2018. Third, the endowment difference in the wage gap is greater for workers in SOEs than for non-SOEs during 2002–2018. The results indicate that most political elites are well-educated, and a larger increase in human capital in CPC members widened the wage gap from 2002 to 2018; workplace discrimination against CPC non-members still exists even in the current period.