Evaluating Ethnic Income Gap in China: The Case of Han, Mongol, and Manchu in Liaoning and Inner Mongolia

Abstract: This study analyzes the 2018 Chinese Household Income Project survey data to evaluate the income gaps between an "outsider" ethnic minority group, the Mongols, an "insider" ethnic minority group, the Manchus, and the majority Han group in urban and rural areas of Liaoning province and Inner Mongolia in China. Three statistical methods, a simple first-order OLS linear regression, linear regressions with interaction terms, and the Blinder-Oaxaca Decomposition, are used to investigate the income disparity amongst the three groups. The results indicate that Mongols suffer a significant ethnic wage penalty attributable to possible discrimination in the rural areas of these two provinces, while the urban income gaps between the three groups can mostly be explained by participation in public sector occupations or affiliation with the Chinese Communist Party. In rural settings, Mongols also have higher returns to public sector jobs and CCP membership compared to the other two ethnic groups. The findings suggest that Chinese affirmative actions regarding ethnic policy are effective in accelerating the integration of ethnic minorities with Han in the outcomes of the labor market. This conclusion is consistent with previous studies.