Monopoly Causes Inter-industry Wage Differentials

SHI Xiancheng ( 史先诚 )
Associate Professor of the Department of Economics, Nanjing University
Research fellow of the Yangtze River Delta Economic and Social Development Research Centre

Editorial note:

Inter-industry wage disparity has received the utmost attention in China, with a host of controversies arising from the abnormally high wages prevalent in such monopoly sectors as telecom and electric power. Following a brief review of literature, the author performs a statistical analysis of inter-industry wage differentials in China. When analysing differential determining factors using econometric techniques, the author finds that human capital can only explain about 60% of the coefficient of variables (CVs) used to measure inter-industry average earning differentials. Based on a more detailed industry analysis, the author attributes the remainder of CVs to monopoly rent sharing.

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