Measurement and Decomposition Analysis of Occupational Income Inequality in China

Using the China CFPS database, this paper measures the degree of intra-occupational inequality in China with the Pareto coefficient and uses the generalized entropy index to decompose the top income gap by region as well as by industry. The empirical results show that, firstly, the degree of income inequality between occupations in China has increased significantly in recent years. The provinces with a higher degree of income inequality between occupations are mostly located in the more economically developed regions in the central and eastern parts of the country, while the degree of inequality between occupations in the western part is lower. Secondly, the highest-income occupations are mainly in the manufacturing industry, with relatively high levels in the construction industry, the education sector, the wholesale and retail trade, and public administration and social organizations, while the levels in other occupations are relatively low. Lastly, the top income gap primarily originates from within industries. However, the contribution rate of the top income gap between industries is gradually increasing, while the contribution rate of the top income gap within industries is gradually decreasing.