Changes in China's Wage Structure

47 Pages Posted: 28 Apr 2012

See all articles by Suqin Ge

Suqin Ge

Virginia Tech - Department of Economics

Dennis Tao Yang

Chinese University of Hong Kong - Department of Economics


Using a national sample of Urban Household Surveys, we document several profound changes in China's wage structure during a period of rapid economic growth. Between 1992 and 2007, the average real wage increased by 202 percent, accompanied by a sharp rise in wage inequality. Decomposition analysis reveals 80 percent of this wage growth to be attributable to higher pay for basic labor, rising returns to human capital, and increases in the state-sector wage premium. Employing an aggregate production function framework, we account for the sources of wage growth and wage inequality in the face of globalization and economic transition. We find capital accumulation, skill-biased technological change, and export expansion to be the major forces behind the evolving wage structure in China.

Keywords: wage growth, wage premium, wage inequality, capital accumulation, trade expansion, technological change, China

JEL Classification: J31, E24, O40

Suggested Citation

Ge, Suqin and Yang, Dennis Tao, Changes in China's Wage Structure. IZA Discussion Paper No. 6492. Available at SSRN:

Suqin Ge (Contact Author)

Virginia Tech - Department of Economics ( email )

Department of Economics
Virginia Tech
Blacksburg, VA 24061
United States

Dennis Tao Yang

Chinese University of Hong Kong - Department of Economics ( email )

Shatin N.T.
Hong Kong
Hong Kong

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