The effect of the state sector on wage inequality in urban China: 1988-2007

Qingjie Xia, Lina Song, Shi Li, Simon Appleton

Research output: Journal PublicationArticlepeer-review

14 Citations (Scopus)


This paper examines the effect of the public sector and state-owned enterprises (SOEs) on wage inequality in urban China using China Household Income Project data. It applies quantile regression analysis, the Machado and Mata decomposition to investigate how urban wage inequality was affected by the changes in wage structure and employment shares of the public sector and SOEs. We find that since the radical state sector reforms designed to reduce overstaffing and improve efficiency in the late 1990s, urban wage gaps were narrowed due to the reduction in the employment share of 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.

Original languageEnglish
Pages (from-to)29-45
Number of pages17
JournalJournal of Chinese Economic and Business Studies
Issue number1
Publication statusPublished - Jan 2014
Externally publishedYes


  • China
  • SOEs
  • counterfactual analysis
  • public sector
  • quantile regression
  • urban wage inequality
  • wage gaps

ASJC Scopus subject areas

  • Economics, Econometrics and Finance (all)


Dive into the research topics of 'The effect of the state sector on wage inequality in urban China: 1988-2007'. Together they form a unique fingerprint.

Cite this