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Persistence of Regional Wage Differences in C hina
Author(s) -
Candelaria Christopher,
Daly Mary,
Hale Galina
Publication year - 2015
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/1468-0106.12113
Subject(s) - wage , economics , offset (computer science) , labour economics , persistence (discontinuity) , demographic economics , regional variation , business , geotechnical engineering , computer science , advertising , engineering , programming language
Regional wage differences in C hina appear to be persistent and even to have grown over the past two decades. We study potential explanations for this phenomenon. After adjusting for the difference in the cost of living across provinces, we find that some of the cross‐province differences in real wages could be related to the quality of labour, industry composition and geographic location of provinces. These factors, taken together, explain approximately half of the cross‐province real wage variation. Interestingly, we find that interprovincial government transfers have not offset regional wage differences during the time period we consider. We also demonstrate that interprovincial migration, while driven in part by levels and changes in wage differences across provinces, did not help offset these differences. These results are consistent with findings in the literature that cross‐province labour mobility in C hina is still limited.