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The dynamic relationship of employment, wages and income gap of urban residents in China was analyzed by using the panel data model, regarding the eastern, central and western of China as research objects. We selected three indicators, the number of employees at the end of the year, the total wages and the Gene coefficient as explanatory variables and explained variables. The results show that the effect of wages for improving or worsening the income gap is greater than the effect of employment, and the effect of employment for income gap is gradually decreasing, the effect of wages for income gap is increasing from eastern to western of China from 2002 to 2012.