Investigating within and between firm inequality in China

In China, after the reform and open in the mid-1970s, people's private wealth has increased drastically, and poverty has been reduced a lot. However, the wealth inequality is also exacerbated. So studying the reason and solution of inequality seems to be sufficient. We use Housing Provident Fund(HPF) Data Set in Beijing to analyze the contribution of different factors to inequality in the period from 2005 to 2013. This time witnesses a fluctuation in inequality with the overall descending tendency. The standard deviation drops from 0.7 in 2005 to 0.62 in 2013. The descending bias is consistent with the income gap trend. We also find that the income gap showed an abrupt ascending in the year 2007 then declined continuously, which is similar to the overall inequality trend. However, the reducing of income inequality is nominal, and the real inequality is widening, as the income gap increases a lot for middle-income class. We also find that for the very top1% of earners, their income decreases a lot in this period. The data analysis shows that 55% of the rise in the variance of (log) earnings occurred within-firms, whereas 45% of the surge occurred between-firms in this period. Moreover, by dividing the whole population with different components, we find that for the male people in gender-controlled analysis, young people in the age-controlled study, and limited liability company in the firm type-controlled study, the standard deviation is downward, which means the inequality drops. In contrast, for the other parts, the inequality is unchanged or ascending.Bachelor of Art