Regional Variation in Earnings Inequality in Reform-Era Urban China

This article studies the regional variation in earnings inequality in contemporary urban China, focusing on the relationship between the pace of economic reforms and earnings determination. Through a multilevel analysis, it shows that economic growth depresses the returns to education and work experience and does not affect the net differences between party members and non-members and between men and women. Overall earnings inequality remains low and only slightly correlated with economic growth because, in faster-growing cities, the tendency toward higher levels in inequality is somewhat offset by the lower returns to human capital. A plausible interpretation is that these results are largely due to the lack of a true labor market in urban China.