Residual Wage Inequality in Urban China, 1995-2007

We use three waves of urban household survey data from 1995 to 2007 to investigate the trends of residual inequality and its determinants. First, we describe the change of overall and residual wage inequality over time. One important new pattern is that the rise in both the overall and residual inequality mainly happened at the upper half of the wage distributions (i.e. the rich are getting relatively much richer) from 2002 to 2007. From 1995 to 2002, however, it is truer to say that the poor are getting relatively much poorer. Second, by using two complementary semi-parametric methods, we find that the composition effect is negligible. Instead, the change in skill prices plays a dominant role in the rise of residual inequality. Finally, by constructing a panel data at the city level, we find that ownership restructuring is an important factor that has caused the skill price to rise, especially in the earlier period. Another finding is that China’s export share of GDP has a positive effect on the enlargement of the upper half distributions. This effect is more significant in the latter period from 2002 to 2007, highlighting the impact of China’s entry into the WTO.urban China, residual inequality, decomposition

Human Capital and Wage Determination in Different Ownerships, 1989-97

labour market segmentation, human capital, wage determination, transition

Changes in Job Structure and Rising Wage Inequality in Urban China, 1995-2007

We use household surveys from 1995, 2002, and 2007 to examine how changes in job structure contributed to China's rising urban wage inequality, considering three job characteristics: occupation, industry, and firm ownership. The explanatory power of job structure for wage inequality increased between 1995 and 2007. Both the change in relative number of jobs (composition effect) and the change in between-job and within-job wage gaps (price effect) contributed to rising wage inequality. Price effect was the major contributor, whereas composition effect played a larger role in the 1995-2002 period than in the 2002-2007 period, and at the lower-half distribution. Between-job inequality played a major role in the first period, and within-job inequality played a major role in the second period. Our results suggest that both technological change and institutional features influence job structure and wage inequality.job structure, wage inequality, urban China, decomposition

Migration, Self-selection, and Income Distributions: Evidence from Rural and Urban China

As massive rural residents leave their home countryside for better employment, migration has profound effects on income distributions such as rural-urban income gap and inequalities within rural or urban areas. The nature of the effects depend crucially on who are migrating and their migrating patterns. In this paper, we emphasize two facts. First, rural residents are not homogeneous, they self-select to migrate or not. Second, there are significant differences between migrants who successfully transformed their hukou status (permanent migrants) and those did not (temporary migrants). Using three coordinated CHIP data sets in 2002, we find that permanent migrants are positively selected from rural population especially in terms of education. As permanent migration takes more mass from the upper half of rural income density, both rural income level and inequalities decrease, the urban-rural income ratio increases at the same time. On the contrary, the selection effect of temporary migrants is almost negligible. It does not have obvious effect on rural income level and inequalities.migration, self-selection, China

Migration, Self-Selection, and Income Distributions: Evidence from Rural and Urban China

As massive rural residents leave their home countryside for better employment, migration has profound effects on income distributions such as rural-urban income gap and inequalities within rural or urban areas. The nature of the effects depends crucially on who are migrating and their migrating patterns. In this paper, we emphasize two facts. First, rural residents are not homogeneous, they self-select to migrate or not. Second, there are significant differences between migrants who successfully transformed their hukou status (permanent migrants) and those did not (temporary migrants). Using three coordinated CHIP data sets in 2002, we find that permanent migrants are positively selected from rural population especially in terms of education. As permanent migration takes more mass from the upper half of rural income density, both rural income level and inequalities decrease, the urban-rural income ratio increases at the same time. On the contrary, the selection effect of temporary migrants is almost negligible. It does not have obvious effect on rural income level and inequalities.migration, self-selection, income distribution, China

China's Higher Education Expansion and its Labor Market Consequences

Using a 1/5 random draw of the 1% census of 2005, we investigate how China’s higher education expansion commenced in 1999 affects the education opportunities of various population groups and how this policy affects the labor market. Treating the expansion as an experiment and using a LATE framework, we find that higher education expansion increased the probability of go to college tremendously. Different populations “benefit” from this policy differently however. Minority female, those from central-western region and from rural areas are less likely to benefit from it. One-child families are more responsive to this policy. Using higher education resources at the provincial level as another dimension of variation, and using a difference-in-difference strategy, we find that the education expansion decreased the within sector inequality of population with above high school (inclusive) education. This is primarily due to the increase of the income level for high school graduate. That of the college graduate deceased, but only slightly and not significantly.China, higher education expansion, LATE, difference in difference, income level

Who Chooses Teaching as a Career? Empirical Evidence from a Survey of College Graduates Employment

The proportion of teaching staff in China’s labor force as a whole has been steadily rising. It increased from 1.99% in 1990 to 2.3% in 2015 according to estimates based on census data. As a result of the expansion of higher education in China, the education level of the newly employed in the labor market has remarkably improved. In this process, one prominent phenomenon is that young females with college degrees have outnumbered their male counterparts. These changes yield significant effects on teacher labor force supply. Consequently, teachers with a university degree or above predominate the teaching staff; the proportion of female teachers with college degrees is also rising. Hence, to better understand college graduates employment and the current state of teacher supply in China, it is crucial to study the factors influencing graduates’ decision on their career as a teacher

The Sustainability of Chinese Growth and the Aggregate Factor Substitution Elasticity

We discuss the sustainability of Chinese high growth relative to growth experience elsewhere, and specifically Soviet Russia in the 1950s to the 1960s by asking if the aggregate technology can eventually similarly constrain high growth performance in the Chinese case as argued by Weitzman in a paper in 1970 discussing the Soviet case. We note in the Chinese case, in contrast to Russia, the declining labor share in GDP over time, which suggests a substitution elasticity above rather than below one. We use time series data on labor’s share in GDP to estimate a substitution elasticity for China, finding that the substitution elasticity is greater than one. We then discuss how sub aggregate high growth can occur when there are three sectors, and large outflows of labor occurring from rural to urban areas over time with implications for the role of factor substitution in future Chinese growth. We argue that high growth in China can be supported in such a framework by a rural to urban labor outflows even if the substitution elasticities in both the urban and rural sectors are less than one. We estimate these two production functions using share data and these indicate substitution elasticities less than one. As such we suggest that aggregate substitution elasticities do not necessarily provide a clear guide as to the sustainability of high Chinese growth.China, growth, sustainability, substitution elasticity

Are all migrants really worse off in urban labour markets: new empirical evidence from China.

The rapid and massive increase in rural-to-urban worker flows to the coast of China has drawn recent attention to the welfare of migrants working in urban regions, particularly to their working conditions and pay; serious concern is raised regarding pay discrimination against rural migrants. This paper uses data from a random draw of the 2005 Chinese national census survey to shed more light on the discrimination issue, by making comparisons of earnings and the sector of work between rural migrants on one hand, and urban residents and urban migrants on the other. Contrary to popular belief, we find no earnings discrimination against rural migrants compared to urban residents. However, rural migrants are found to be discriminated in terms of the sector in which they work, with a vast majority working in the informal sector lacking adequate social protection.Migration, China, Discrimination, Informal Employment

Migration, Self-selection, and Income Distributions: Evidence from Rural and Urban China

As massive rural residents leave their home countryside for better employment, migration has profound effects on income distributions such as rural-urban income gap and inequalities within rural or urban areas. The nature of the effects depend crucially on who are migrating and their migrating patterns. In this paper, we emphasize two facts. First, rural residents are not homogeneous, they self-select to migrate or not. Second, there are significant differences between migrants who successfully transformed their hukou status (permanent migrants) and those did not (temporary migrants). Using three coordinated CHIP data sets in 2002, we find that permanent migrants are positively selected from rural population especially in terms of education. As permanent migration takes more mass from the upper half of rural income density, both rural income level and inequalities decrease, the urban-rural income ratio increases at the same time. On the contrary, the selection effect of temporary migrants is almost negligible. It does not have obvious effect on rural income level and inequalities