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On the evolution of the wage premium for party membership in China

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  • Zagler, Martin
  • Amighini, Alessia
  • Fang, Weidi

Abstract

We analyze the evolution of wage differentials between party members and non-members across more than two decades (1995-2018). We apply the Oaxaca-Blinder composition method to disentangle the contribution to the wage gap of different levels of human capital from discrimination against non- members. We also run quantile regressions to estimate the slope of the wage premium functions applying the Macada-Mata decomposition. Our results show party wage premium has decreased over time, but it is still high. There is also evidence of a widening divergence between urban and rural workers, with the former getting higher wage premia since 2013, while the latter have lost most of their return to party membership, and is still positive only for workers in the top quintile. A positive discrimination for CPC members (not justified by characteristics) started in 2013; the party still recruits elites, but over-pays them for party loyalty more than for their qualifications, attracting opportunists.

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  • Zagler, Martin & Amighini, Alessia & Fang, Weidi, 2023. "On the evolution of the wage premium for party membership in China," Department of Economics Working Paper Series 351, WU Vienna University of Economics and Business.
    • Handle: RePEc:wiw:wus005:46498653
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    More about this item

    Keywords

    Communist Party of China (CPC); wage premium for CPC membership; decomposition methods; China;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • P21 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Planning, Coordination, and Reform
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J43 - Labor and Demographic Economics - - Particular Labor Markets - - - Agricultural Labor Markets
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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