On the evolution of the wage premium for party membership in China

Abstract

We analyze the evolution of explained and unexplained differences in wages between members of the Communist Party of China and non-members across more than two decades (1995–2018). We apply the Oaxaca-Blinder decomposition method to disentangle the contribution to the wage gap of different levels of human capital from discrimination against non-members. We also run quantile regressions to estimate the slope of the wage premium functions applying the Machado-Mata decomposition. Our results show that the party wage premium has decreased over time, but it is still high. Our novel finding is that a positive discrimination for members of the Chinese communist party (not justified by characteristics) started in 2013 and dominates in 2018. Whilst before the party has recruited elites and paid them fairly for their qualifications, party members are now positively discriminated, and this may attract opportunists more than elites.