Abstract: This paper builds a DID model based on the negative list of market access, and discusses the impact of this market-oriented reform policy on income inequality within firms and the mechanism underlying the impact. The results show that the negative list significantly improves the salary of ordinary employees and inhibits the salary of managers, finally narrowing the income inequality. The mechanism analysis finds that the negative list can reduce the income inequality by reducing rent-seeking, promoting market competition and easing financing constraints. Heterogeneity analysis shows that the effect of negative list on income inequality is more obvious in private firms, labor-intensive firms and firms in poor regional institutional environment. Further research finds that the reduction of income inequality within firms by the negative list is mainly manifested as the suppression of unreasonable excessive salary gaps, and the implementation of the policy has strengthened the performance incentive effect of reasonable salary gaps. This paper provides new inspiration for the government to optimize the income distribution pattern through the construction of a high standard market system.

Key words: marketization, negative kist of market access, income inequality within enterprises, over-compensation