This paper explores the role of ‘inequality of opportunity’ in individual earnings in rural China, which is attributed to ‘circumstantial’ factors over which individuals have no control, including family background, gender, ethnic minority status and region of birth. These circumstances are contrasted with ‘efforts’ or choices that individuals make, which also impact on their individual earnings. Utilising the China Labour-force Dynamics Survey (CLDS) 2014, Xinjie measures the share of inequality of opportunity in the overall inequality of individual annual earnings for the entire sample and for each of four ten-year birth cohorts. Across all birth cohorts, gender is consistently the largest single contributor to inequality of opportunity, while family background is relatively more important for younger cohorts. A closer investigation shows that three identifiable ‘effort’ variables—own education, off-farm employment and marital status—are pivotal in determining income inequality, while migration is not. The paper also examines how circumstances influence individual earnings not only directly, but also indirectly through these three ‘effort’ variables.
Xinjie Shi is a PhD candidate at the Australian Centre on China in the World. He was awarded a Bachelor of Management by China Agricultural University. His previous research included urbanization and land system reform in China. Current research interests are in agricultural economics and development economics, with a focus on Chinese rural development, migration, and income inequality.