The possibility of a shared development path, together with a common language and culture, suggests that it is useful to examine the determinants of earnings in Taiwan and China. Using data from the Chinese Household Income Project and official household income survey data of Taiwan we estimate the distribution of earnings in Taiwan (1978–1995) and China (1988–1995). In spite of differences in the trend in earnings inequality, we find converging levels and returns to education between the two countries. In contrast, returns to experience appear not to be converging, most likely due to China’s dramatic economic restructuring.
