Research On The Factors Which Influence The Regional Wage Differentials In China

In recent years, with the development of market economy and continued high growth of total economy, China has shocked th e whole world. With the high-speed growth of economy and the li ving standard has improved remarkably, the growing regional wage differentials has been paied more and more attention. Among the t hree kinds of differentials which are the differentials between urban and rural, the regional differentials, and the differentials between d ifferent industries. The regional wage gap is the key factor which would block the economy form balanced and sustainable developing.The unbalanced economic development and continued increasing ga p are likely to lead to social unstability. Therefore, with building a well-off society in an all-round way and constructing harmonious s ociety was put forward, it is necessary for us to fully understand t he importance of regional wage differentials.This paper analyzes the current situation of regional wage diffe rentials in China. First we describe the Gini coefficient trend from 1995 to 2003, in order to measure the overall wage differentials in China. Then we analyze the present situation from overall perspect ive using the data of the average wage from various provinces and cities nationwide and contrast wage differentials among the three r egions in China. Finally, we analyze the trend of regional wage dif ferentials between the three major areas in China through extremum method and Theil index. The result shows that the regional wage differentials still exsiting, but the overall trend is convergence in re cent years.Still further more, the paper analyzes the influence of the facto rs on the regional wage differentials theoretically。 Firstly, we analyz e the relationship between economic growth and regional wage gap theoretically, then we analyze the influence of the economic struct ure, the location condition, education, the policy system and the hum an factor on regional wage gap qualitatively. After that we creat th e panel data model considering the factors which are capital, educat ion, trade, foreign direct investment (FDI), infrastructure and structu re as the explanatory variables. When analyzing the overall sample, it shows the wage is influenced capital, education, trade, structure; When researching the three sub-samples, each factor has different i mpact on wage among three regions because of the different natural endowments, different development condition and economic policy.Finally, the conclusion is that increasing capital investment and improving the level of education in central and western regions ca n effectively narrow the regional wage differentials; in addition, pro moting industrial structure optimization and upgrading in the central and western regions can also improve their wages and reduce the wage gap with the eastern region.