This chapter is to investigate the reasons of income inequality across provinces. Using 1988 and 2013 CHIP individual data from 14 provinces and 13 sectors (16 sectors in 2013), the province level natural log of income differences increased by 3.06 between 1998 and 2013. The average schooling increased by 1.79 years and the share of agricultural sector decreased by 41% during this period. However, the overall individual level income variance increased from 0.16 in 1988 to 0.64 in 2013. The increase in within-sector income variance is responsible for the increased variances. In my analysis, I assume the education effect, return to schooling and sector share shift can contribute to the income variances. Among these three factors, the increase in return to schooling and sector share shift from agricultural sectors to other sectors are attribute to the income inequality.