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The Association between Spouses’ Earnings and Earnings Inequality in Urban China: 1988-2007

Sat, August 11, 10:30 to 11:30am, Philadelphia Marriott Downtown, Floor: Level 5, Salon G

Abstract

This study examines the role of the association between spouses' earnings in accounting for the increase in earnings inequality among married couples during China’s market transition. I find the changing association between spouses’ earnings contributed little to the observed increase in earnings inequality among couples during 1988-2002. After 2002, however, the growing association between spouses’ earnings was pronounced, accounting for 12% of the growth in inequality. This recent turn of events was mainly driven by the increasing resemblance between spouses’ earnings among dual-earner couples. In contrast to what we might expect, this recent rise in spousal earnings association among dual-earner couples has little to do with the growing educational homogamy in urban China. Finally, much of the observed increase in earnings inequality among couples is attributable not to how much the association between spouses’ earnings has changed, but to the fact that it has remained at a considerably high level throughout the whole period. The constantly high level of spousal earnings correlation produced much of the observed increase in the earnings inequality among married couples.

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