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Earnings Differentials and Ownership Structure in Chinese Enterprises

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Author Info

  • Chen, Yi
  • Demurger, Sylvie
  • Fournier, Martin

Abstract

This article analyzes the determinants of earnings differentials among enterprises of different ownership in urban China in 1995, using an extended version of Oaxaca-Blinder decomposition methods. We find strong evidence of a nonintegrated multitiered labor market in China, pure ownership-related differences, and differences in hours worked being the major determinants of observed earnings gaps. Our results highlight different paying schemes among domestic enterprises as well as between domestic and foreign enterprises. We stress the dual nature of domestic production structures, workers in central state-owned enterprises (SOEs) being highly protected as compared to other domestic enterprises. We also emphasize that foreign-invested enterprises provide higher total annual earnings mostly at the cost of a much longer working time and do not offer higher hourly earnings than large state-owned enterprises. Our results provide explanations for the very low labor mobility observed in large overstaffed SOEs in the 1990s, a situation that led to massive layoffs at the end of the decade.

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Bibliographic Info

Article provided by University of Chicago Press in its journal Economic Development and Cultural Change.

Volume (Year): 53 (2005)
Issue (Month): 4 (July)
Pages: 933-58

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Handle: RePEc:ucp:ecdecc:y:2005:v:53:i:4:p:933-58

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Web page: http://www.journals.uchicago.edu/EDCC/

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Cited by:
  1. Sylvie DEMURGER & Martin FOURNIER & CHEN Yi, 2006. "The Evolution of Gender Earnings Gaps and Discrimination in Urban China: 1988-1995," Working Papers 23, ECINEQ, Society for the Study of Economic Inequality.
  2. Sylvie Démurger & Marc Gurgand & Shi Li & Yue Ximing, 2008. "Migrants as second-class workers in urban China? A decomposition analysis," Post-Print halshs-00269119, HAL.
  3. Yi Chen & Sylvie Démurger & Martin Fournier, 2007. "Différentiels salariaux, segmentation et discrimination à l'égard des femmes sur le marché du travail chinois," Post-Print halshs-00144896, HAL.
  4. Sylvie Démurger & Martin Fournier & Li Shi & Wei Zhong, 2006. "Economic liberalization with rising segmentation on China’s urban labor market," Working Papers 46, ECINEQ, Society for the Study of Economic Inequality.
  5. Jin Song & Shi Li, 2010. "Ownership and earnings inequality in urban China," Frontiers of Economics in China, Springer, vol. 5(4), pages 582-603, December.
  6. Li, Tao & Zhang, Juyan, 2010. "What determines employment opportunity for college graduates in China after higher education reform?," China Economic Review, Elsevier, vol. 21(1), pages 38-50, March.
  7. Nielsen, Ingrid & Smyth, Russell, 2008. "Who bears the burden of employer compliance with social security contributions? Evidence from Chinese firm level data," China Economic Review, Elsevier, vol. 19(2), pages 230-244, June.
  8. Yuanyuan Chen & Shuaizhang Feng, 2011. "Parental education and wages: Evidence from China," Frontiers of Economics in China, Springer, vol. 6(4), pages 568-591, December.
  9. Sylvie Démurger & Martin Fournier & Yi Chen, 2007. "The Evolution of Gender Earnings Gaps and Discrimination in Urban China, 1988-95," Post-Print hal-00138124, HAL.
  10. Laura Hering & Sandra Poncet, 2010. "Market access and individual wages: evidence from China," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00633785, HAL.
  11. Chen, Zhihong & Ge, Ying & Lai, Huiwen, 2011. "Foreign Direct Investment and Wage Inequality: Evidence from China," World Development, Elsevier, vol. 39(8), pages 1322-1332, August.

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