In company with the fast development of Chinese economy, the income gap within the country has been gradually enlarging since the open-up reform in 1978. The current GINI coefficient of China has already been above the internationally recognized caution line. In particular, the income gap between the high-skilled workers and low-skilled workers has significantly contributed to the enlarging income inequality of the country. In the meanwhile, the higher education expansion policy initiated in 1998 has dramatically changed Chinese labor market structure which results in a surge in the supply of high quality labor. Based on the CHNS data of 1997, 2004 and 2011,this paper studies the effect of labor structure change on the income gap with the RIF regression approach. The results show that the increase in high quality labor supply has little effect on the income gap in the short run while it enlarges the gap in the long run as a result of directed technological change. Additionally, the results indicate that the higher education enlarges the social income gap through significantlyraised revenue of high-income group.