Visible and invisible hands intertwined: State-market symbiotic interactions and changing income inequality in urban China

Abstract

Analyzing the restructured political economy in 21st-century urban China, this project develops a “symbiotic interaction” model and reconceptualizes the state-market relationship to appreciate the changing inequality patterns. As the state and market have formed a long-term, intimate relationship, dynamic state policies interact with the fragmented labor market to redefine a set of socioeconomic capitals and statuses in affecting income inequality. Drawing empirical evidence from the Chinese General Social Survey 2003 and 2013 data, this paper employs linear and unconditional quantile regressions to compare income disparity patterns along both temporal and socio-spatial dimensions. The findings show that multiple key factors, including human capital (e.g., college education), political capital (e.g., party membership), occupational status (e.g., self-employment), and organizational type (e.g., state-owned enterprise), have all changed their economic returns over time and also played different roles for various earning groups. These findings suggest that we should conduct substantive institutional analyses of the evolving state-market relationship and their interplay to achieve a deeper understanding of the reshuffled stratification order in contemporary China. The proposed analytical framework also has broad implications in the research of other transitional economies.