Xia, Qingjie (2011). "The Impact of Public Sector and State-Owned Enterprises on Income Inequality of Urban China: 1988-2008" Paper presented at the 8th annual conference of the HDCA, 6-8 September 2011, the Hague, the Netherlands.

This paper intends to examine effect of public sector and state-owned enterprises (SOEs) on the wage inequality of urban China by using the 1988, 1995, 2002 and 2007 CHIP urban household survey data. To this end, we employ quantile regressions, parameterised counterfactual decomposition (including our innovation) to single out the factors representing the change of wage structure and employment shares of the public sector and SOEs respectively, which affect wage inequality and wage gap of urban China from 1988 to 2007. The econometric results show that after the radical SOEs reform aimed at solving over-manning and improving efficiency in the late 1990s, the wage premium to the public sector and SOEs (relative to the non-state sectors) grows much larger, and the change of the wage structure of public sector and SOEs causes the enlargement of urban wage inequality and wage gap.