ABSTRACT
Section 4 starts with Wenjie Zhang’s chapter, “The evolution of China’s pay inequality during the transitional period.” This chapter provides new estimates of the evolution of pay inequality in China, overall and by region and sector, from 1987 to 2012, using the between-group component of Theil’s T-statistic measured across regions and sectors. Dr. Zhang finds that China’s overall pay inequality started to rise rapidly in the early 1990s, peaking in 2008, with the between-province component peaking as early as 2002. Zhang shows that since 2008, overall pay inequality has decreased, with between-province and between-sector inequality both showing steady declines. She argues that China’s pay inequality during the reform period is not simply a matter of economic inequality; it is a joint product of both market forces and institutional forces. Zhang therefore argues that the recent decline of overall pay inequality after the crisis is not a temporary phenomenon triggered by the global economic downturn, but a long-term outcome driven by both economic and policy factors.
