Regional Wage Inequality in China, 1996-2010

This paper examines regional wage inequality in China between 1996 to 2010, subdividing that time span into a period of increased wage inequality during 1996-2002 and one of stable to decreasing inequality for 2003-2010. Based on the interplay between wage levels and wage growth, the authors develop a typology whereby China's provinces can be assigned to either peripheral, emerging, lagging, or leading regions. The particular characteristics associated with each type of wage region, and the factors underlying shifts of particular provinces from one category to another between the two periods, enable them to identify specific causes for the reversal (after 2002) of the trend toward increasing wage inequality (the causes especially reflect wage patterns in the mining and energy industries, information and communication technology industries, and foreign-invested enterprises). The recent wage convergence involves instances of both interior provinces advancing from the "emerging" to the "leading" wage category as well as the decline of a few "leading" coastal provinces to "lagging" status.