Inequality In Urban China Research Articles

A provincial perspective on income inequality in urban China and the role of property and business income

This paper tries to investigate the role of non-wage income in explaining the income inequality in urban China. Our findings show that the contribution of income sources to inequality is different between the provinces with different extents of inequality. We find that in the coastal provinces, the contribution of wage income to inequality is decreasing, while the contribution of business and property income is increasing and getting more important; in contrast, in the western provinces, the role of wage income is larger than the other provinces, while the role of business and property income is smaller and remains unchanged. Our empirical results also suggest that the provinces with higher share of business and property income have high income inequality.

The Effects of the State Sector on Wage Inequality in Urban China: 1988–2007

This paper examines the effects of state sector domination on wage inequality in urban China. Using Chinese Household Income Project surveys, we conduct two exercises: with quantile regression analysis, we identify wage gaps across the distribution and over time; and we employ the Machado and Mata (2005) decomposition to investigate how urban wage inequality was affected by the changes in wage structure and employment share of the state sector. We find that since the radical state sector reforms designed to reduce over-staffing and improve efficiency since the late 1990s, urban wage gaps were narrowed due to the reduction of employment share in the state sector; the wage premium of the state sector in comparison with the non-state sector increased significantly; and changes in the wage structure of the labour market caused the rise in urban wage inequality.

Book review: Islam, Family Life, and Gender Inequality in Urban China

Book review: Islam, Family Life, and Gender Inequality in Urban China

Ownership Restructuring, Marketization and Wealth Inequality in Urban China: 1995 and 2002

AbstractThis paper proposes a property transformation perspective to examine the mechanisms of wealth accumulation and wealth inequality creation during China's post‐1978 transformation. It examines how enterprise ownership restructuring, marketization and state politics have resulted in greater wealth inequality between cadres and ordinary workers, between public sectors/organizations and private sectors/organizations. Mainly drawing on data from the Chinese Household Income Project conducted in 1995 and 2002, we find that the property transformation process has created greater wealth disparity among different occupational groups and among those working in different work organizations since the mid‐1990s. However, it is inconclusive whether non‐housing wealth or total household wealth are increasing at the same pace across different occupations and work organizations with the growing market penetration and the spread of privatization.

Residual wage inequality in urban China, 1995–2007

Abstract We use three waves of urban household survey from 1995 to 2007 to investigate the trends of residual inequality and its determinants. First, we find that the enlargement in both the overall and residual inequality was larger at the upper half of the wage distributions between 2002 and 2007. Between 1995 and 2002, however, it is the lower half that experienced larger increase in inequality. Second, by using two complementary semi-parametric methods, we find that composition effect is negligible. Instead, the change in skill prices plays a dominant role in the rise of residual inequality. Finally, by constructing a panel data at the city level, we find that ownership restructuring is an important factor that has caused the skill price to rise, especially in the earlier period. Another finding is that China's export share of GDP has a positive effect on the enlargement of residual wage inequality, especially in the period from 2002 to 2007.

Economic Reforms and Gender Inequality in Urban China

AbstractThis study jointly examines the gender earnings gap and employment rate in urban China using a longitudinal data set that covers the period of 1989–2004. Consistent with previous studies, we find that gender earnings gap increased by 5 percentage points between 1989 and 1997. Since then, its changes have become much more moderate. Actually, after controlling for observed characteristics, the size of the earnings gap in 2004 is almost the same as it was in 1997. The widening earnings gap in the 1989–1997 period was accompanied by a rising employment gap between men and women, particularly among those aged 45 and older. The stability in the gender earnings gap in the later years co-occurred with a decline in the employment of less educated women.

Decomposition of the increase in earnings inequality in urban China: A distributional approach

This study examines changes in Chinese urban income distribution from 1987 to 1996 and 1996 to 2004 using nationwide household data and investigates the causes of these changes. The Firpo, Fortin, and Lemieux (2007, 2009) method based on unconditional quantile regressions is used to decompose changes in income distribution and income inequality measures, such as variance and a 10:90 ratio. The decomposition results show that wage structure effects, such as a widening gender earnings gap, increases in returns to college education, and increases in earnings differentials between industries, company ownership types, and regions, have been the major contributors to the overall increases in income inequality. It was also found that at different points on the income distribution (e.g., the lower or upper half), the contributing factors that increase income inequality are different.

Changes in Job Structure and Rising Wage Inequality in Urban China, 1995-2007

We use household surveys from 1995, 2002, and 2007 to examine how changes in job structure contributed to China's rising urban wage inequality, considering three job characteristics: occupation, industry, and firm ownership. The explanatory power of job structure for wage inequality increased between 1995 and 2007. Both the change in relative number of jobs (composition effect) and the change in between-job and within-job wage gaps (price effect) contributed to rising wage inequality. Price effect was the major contributor, whereas composition effect played a larger role in the 1995-2002 period than in the 2002-2007 period, and at the lower-half distribution. Between-job inequality played a major role in the first period, and within-job inequality played a major role in the second period. Our results suggest that both technological change and institutional features influence job structure and wage inequality.

Labour Market Disparity, Poverty, and Inequality in Urban China

ABSTRACT: This paper examines poverty and income inequality in urban China by analysing recent survey data collected in four of the largest Chinese cities(1). Using a number of quantitative measurements, including poverty indices and Gini coefficients, the paper investigates income poverty and inequality among three groups, namely urban locals, urban migrants, and rural migrants. The results strongly suggest that urban poverty and inequality are a serious issue and that rural migrants have become a major segment in the urban poor class. The results are expected to contribute to the debate on how to improve public policy on poverty alleviation, which currently focuses only on officially registered urban locals.

Ownership and earnings inequality in urban China

Along with advances in urban state-owned enterprise reform, fast growth of private sector and changes in the wage structure, earnings inequality in urban China has been increasing. Using data from the 1988 and 2007 waves of the urban household survey conducted by China Household Income Project, this paper attempts to examine the impact of the change in ownership structure on earnings distribution in urban China. We find that developing non-state-owned enterprises (nonSOEs) or privatization of state-owned enterprises (SOEs) enlarge earnings inequality, but the difference in earnings level between the two sectors is small. Although workers in SOEs receive higher income than in nonSOEs, the difference is more caused by endowment difference rather than coefficient differences. Introducing market power to wage determination system is more influential to the rising earnings inequality which leads more rewards on working experience and educational attainment.

Uncertainty and the problem of value: Consumers, culture and inequality in urban China

This article examines the divergent shopping patterns for consumers located in different positions within urban China’s social hierarchy. Drawing upon detailed ethnographic data, the article argues that differentiated class positions in urban China are expressed through the practicalities of daily shopping and consumer practices that involve fundamentally different ‘problems’ of uncertainty and value in the marketplace. It is shown that questions of social inequality are central to understanding not only marketplace behaviors, but also in drawing connections between markets and cultural logics of daily life.

Income and Consumption Inequality in Urban China: 1992–2003

Using the nationally representative Urban Household Income and Expenditure Survey (UHIES) conducted by the National Bureau of Statistics (NBS) of China, we document a steadily rising trend in income and consumption inequality during the period from 1992 to 2003 in urban China. Despite the rising urban inequality over time, the social welfare of urban residents unambiguously improved because every income group saw their income and consumption increase over this period (higher income groups experienced faster increases). Moreover, consumption inequality follows income inequality very closely. Labor income inequality accounts for about two‐thirds of total income inequality quite consistently over time. We find that only about one‐third of urban inequality can be attributed to observable individual choices and characteristics, of which education has increasing explanatory power, while regional differences become less important over time. We also find that restructuring of the SOE sector, urbanization, and globalization are important contributing factors to rising overall urban inequality and the within‐group inequality not accounted for by observable individual choices and characteristics.

Effects of Education on Earnings Inequality in Urban China: 1988-2003

Using annual urban household survey data from 6 provinces in different regions of China, we analyze the rapid increase in earning inequality of urban China from 1988 to 2003. We describe overall and residual inequality trends and use quantile regression to address the relationship between education and earning inequality. We find that returns to education are higher for the low earning individuals in the first half of this period conditional on their observable characteristics. This suggests that education has a negative impact upon within-group earning inequality. However, the situation is reversed during the recent half period. Using the Quantile-JMP decomposition technique we partition the observed distribution of earnings into ‘price’ components (earning coefficients) and ‘quantity’ components (labor force composition) and calculate, through simulation, the impact of education on changes in overall earning dispersion. The decomposition shows that the rise of earning dispersion between 1988 and 2003 is almost entirely accounted for by prices rather than quantities, and it attributes a large proportion to the overall effect of education. From 1988 to1997 education serves as the equalizing force to decrease earning inequality but it is the primary driving force which increases the earning inequality between 1997 and 2003. The empirical analysis also reveals that the overall effect of college and above education category on the growth of earning inequality is the most pronounced one.

Access to Housing in Urban China

Like income inequality, housing inequality in urban China is strongly affected by state policies that give preferential treatment to insiders. In this case, the key policies are related to their residence status, which involves not only their migration history but also their legal position. Using data from the Chinese census of 2000 for eight large cities, this study shows how residence status affects access to various pathways to housing. In addition to the well-known marginal housing situation of the recent 'floating population', it documents surprising advantages for migrants with urban registration status and persistent disadvantages for rural migrants regardless of how long they have lived in the city.

Voluntary and involuntary job mobility and earnings inequality in urban China, 1993–2000

This paper proposes a model of selective mobility of workers from the state sector to the market sector to illustrate how the market transition has led to earnings inequality in former state socialist countries. Analysis of the survey data collected in 2000 from 10 Chinese cities reveals that recent entrants into the market are driven by two different institutional processes—some are self-selected for higher economic returns (voluntary entrants) and some are pushed into the market through layoffs (involuntary entrants), resulting in a more heterogeneous body of workers in the market sector than before. Linear regression results show that the commonly observed higher earnings in the market sector are limited only to a subgroup of later entrants who enter the sector voluntarily. Propensity-score matching analyses further demonstrate that the effect of a late market entry on earnings is negatively associated with the propensity of making such a transition. Those who would otherwise do well in the state sector and therefore have a lower propensity for entering the market benefit more from the entry.

What Lies behind Rising Earnings Inequality in Urban China? Regression-based Decompositions

Coupled with advances in enterprise reform and changes in the wage structure, earnings inequality in urban China has been increasing, and this has contributed significantly to rising income inequality. Using urban household survey data from the 1988, 1995 and 2002 waves of the China Household Income Project, in this article, we decompose earnings inequality in urban China by using the recently developed regression-based decomposition methods. The decomposition results indicate that the effects of gender and membership of the Communist Party of China on earnings inequality have changed little. While work experience had a reduced effect on earnings inequality, the effects of education and occupation have increased. The contributions of ownership status and industry to earnings inequality have increased. Regional effects have been the largest recent contributor to earnings inequality. (JEL codes: D31, J31, O53) Copyright The Author 2009. Published by Oxford University Press on behalf of Ifo Institute for Economic Research, Munich. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org, Oxford University Press.

When marketisation and privatisation clash with socialist ideals: Educational inequality in Urban China

In the last two decades, China's education has experienced significant transformations and restructuring on account of privatization and marketization. Unlike the Mao era when the state assumed the major responsibilities in financing and providing education, individuals and families have now to bear increasing financial burdens in paying for education. The marketization and privatization of education has undoubtedly intensified educational inequalities and widened regional disparities between the economically developed areas in the eastern coast and the less economically developed areas in the middle and north-western parts of the country. The growing inequalities in education and the increasing financial burdens presented by education have been a source of social discontentment, which have in turn prompted the central government to revisit its approaches to educational development. This article sets out to examine, how in this wider policy context, China's education has been transformed following the adoption of more pro-competition and market-oriented reform measures. This article is based on intensive secondary data analysis, fieldwork observations, and findings from a household survey conducted in eight different Chinese cities about people's perceived education hardship. The article concludes by considering how the Chinese government has attempted to address the problems of educational inequalities that have intensified on account of two decades of education marketization.

Rank, income and income inequality in urban China

Abstract While some workers in China attain senior professional level and senior cadre level status (Chuzhang and above), others attain middle rank including middle rank of professional and cadre (Kezhang). This aspect of the Chinese labour force has attracted surprisingly little attention in the literature, a fact which this paper aims to rectify. We define various segments of the urban population in work-active ages and use data from the Chinese Income Project (CHIP) covering eastern, central and western China for 1995 and 2002. For 2002, persons of high rank make up 3% and persons of middle rank make up 14% of persons in work-active ages. Factors that affect a person's likelihood of having high or middle rank are investigated by estimating a multinomial probit model. We find that education, age and gender strongly affect the probability of being employed as a worker of high rank. There is relatively little income inequality among workers of high rank as well as among workers of middle rank. Mean income and household wealth per capita of highly-ranked workers developed more favorably than for other segments of the population studied, and personal income is more polarized by segment in 2002 than in 1995. Workers of high rank, and to a lesser degree, workers of middle rank, are among the winners in economic terms while the increasingly large category of non-workers is the losers. Rates of return to education have increased but income function analysis indicates that this provides only a partial explanation for the increased favorable income situation for workers of high and middle ranks.

Commercial Redevelopment and Regional Inequality in Urban China: Xining's Wangfujing?

An American urban geographer specializing in China explores whether a commercial and urban redevelopment model successful in Beijing (Wangfujing) can be transferred to a more remote region of the country (Qinghai Province), and whether the potential benefits outweigh the costs of dismantling the traditional commercial core of the relatively large provincial capital of Xining, with one-half million inhabitants. The Xining project is investigated in the contexts of globalization, secondary globalization, and the diffusion of urban planning and development practices in China. The biases in Chinese planning practice toward methods employed in large eastern cities are considered in light of global trends toward neoliberalism and the new regionalism. Journal of Economic Literature, Classification Numbers: I31, O18, R58. 2 figures, 83 references.

Effects of Education on Earnings Inequality in Urban China: 1988-2003

Using annual urban household survey data from 6 provinces in different regions of China, we analyze the rapid increase in earning inequality of urban China from 1988 to 2003. We describe overall and residual inequality trends and use quantile regression to address the relationship between education and earning inequality. We find that returns to education are higher for the low earning individuals in the first half of this period conditional on their observable characteristics. This suggests that education has a negative impact upon within-group earning inequality. However, the situation is reversed during the recent half period. Using the Quantile-JMP decomposition technique we partition the observed distribution of earnings into price components (earning coefficients) and quantity components (labor force composition) and calculate, through simulation, the impact of education on changes in overall earning dispersion. The decomposition shows that the rise of earning dispersion between 1988 and 2003 is almost entirely accounted for by prices rather than quantities, and it attributes a large proportion to the overall effect of education. From 1988 to 1997 education serves as the equalizing force to decrease earning inequality but it is the primary driving force which increases the earning inequality between 1997 and 2003. The empirical analysis also reveals that the overall effect of college and above education category on the growth of earning inequality is the most pronounced one.