Increasing urban wage inequality in China extent, elements and evaluation

John Knight, Lina Song

Research output: Journal PublicationArticlepeer-review

139 Citations (Scopus)


Two strictly comparable cross-section household datasets, relating to 1988 and 1995, are used to analyse the increase in wage inequality from an initially low level in urban China over this period of labour market reform. The institutional background and the evolution of policy are described. The rapid growth of wage inequality and the sharp widening of wage structure are quantified. Earnings functions are compared, and the increase in both the level and the inequality of wages are decomposed into their constituent elements. Quantile regression analysis is conducted to throw light on the relationships between the observed and the unobserved determinants of wages. Distinctions are made between the variables likely to represent human capital, discrimination, and segmentation. The evidence suggests that productive characteristics were increasingly rewarded as marketization occurred, but that discrimination and segmentation also grew. The move towards a fully-fledged labour market was by no means complete.

Original languageEnglish
Pages (from-to)597-619
Number of pages23
JournalEconomics of Transition
Issue number4
Publication statusPublished - 2003
Externally publishedYes


  • China
  • Discrimination
  • Economic reform
  • Human capital
  • Inequality
  • Labour market
  • Segmentation
  • Wages

ASJC Scopus subject areas

  • Economics and Econometrics


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