Contributors to Urban Earnings Inequality: 1988-2007

LI Shi and SONG Jin

School of Economics and Business Administration, Beijing Normal University

Abstract: Along with further reforms of the state-owned sector and rapid growth of the private sector, the earnings structure of urban residents has undergone significant changes that have led to growing earnings inequality. Using data collected by the China Household Income Project (CHIP), this paper analyzes the widening earnings inequality of urban residents and the factors behind it. Results verify that rising returns from human capital have become the primary contributor to the rising earnings inequality. In addition, widening earnings gaps between genders and across different regions have also contributed to this inequality.

Key words: Earnings inequality, human capital, market segmentation

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