This article studies the regional variation in earnings inequality
in contemporary urban China, focusing on the relationship between
the pace of economic reforms and earnings determination.
Through a multilevel analysis, it shows that economic growth depresses
the returns to education and work experience and does
not affect the net differences between party members and nonmembers
and between men and women. Overall earnings inequality
remains low and only slightly correlated with economic
growth because, in faster-growing cities, the tendency toward
higher levels of inequality is somewhat offset by the lower returns
to human capital. A plausible interpretation is that these
results are largely due to the lack of a true labor market in urban
China.