Evolution of the Industrial Wage Structure in China Since 1980

Industry mean wages in China have exhibited sharply increased dispersion since the early 1990, and the wage pattern has become increasingly similar to the that of developed countries and to two major emerging economies, Russia and Brazil. The upward trend in differences of average wages among major industry groups parallels increases in wage and income inequality throughout the Chinese economy. Research on the trend has attributed rising inequality to market forces leading to better matches between worker pay and worker skills; expansion of the share of employment in the non-government ownership sector; and/or residual government control in some industrial sectors that has generated high wages through monopoly rent sharing. We show that the industrial wage dispersion in China has evolved to match persistent and wide spread international patterns of industrial wage dispersion and that an increasing proportion of industrial wage dispersion is associated with the industrial distribution of and payments to observed worker characteristics