Has China Crossed the Threshold of the Kuznets Curve? New Measures from 1987 to 2012 Show Declining Pay Inequality in China after 2008

This paper provides new estimates of the evolution of pay inequality in China, overall and by region and sector, from 1987 to 2012, using the between-groups component of Theil's T-statistic measured across regions and sectors. We find that China's overall pay inequality started to rise rapidly in the early 1990s, that it peaked in 2008, with the between-provinces component peaking as early as 2002. Since 2008 overall pay inequality has decreased, with between-province and between-sector inequality both showing steady declines. In these respects, the evolution of pay inequality in China mirrors the trajectory expected under the hypothesis of a Kuznets curve