Political background and its influences on wage gaps: Evidence from China

Using the data from the Chinese Household Income Project Survey and the decomposition method, this study investigates the determinants of the wage gap between members and non-members of the Communist Party of China (CPC) from 2002-2018. There were three new findings. First, the endowment difference component (especially education) is the main contributing factor to the wage gap between CPC members and non-members in 2002, 2013, and 2018. Second, the discrimination against CPC non-members decreased, whereas that of human capital increased from 2002 to 2018. Third, the endowment difference in the wage gap is greater for workers in SOEs than for non-SOEs during 2002-2018. The results indicate that most political elites are well-educated, and a larger increase in human capital in CPC members widened the wage gap from 2002 to 2018; workplace discrimination against CPC non-members still exists even in the current period.