Sylvie Démurger () (GATE, University of Lyon, CNRS, ENS-LSH, Centre Léon Bérard, France) Marc Gurgand () (Paris School of Economics and Crest,France) Li Shi () (School of Economics and Business, Beijing Normal University, China) Yu Ximing () (School of Finance,Renmin University of China, Beijing, China)
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In urban China, urban resident annual earnings are 1.3 times larger than long term rural migrant earnings as observed in a nationally representative sample in 2002. Using microsimulation, we decompose this difference into four sources, with particular attention to path dependence and statistical distribution of the estimated effects: (1) different allocation to sectors that pay different wages (sectoral effect); (2) hourly wage disparities across the two populations within sectors (wage effect); (3) different working times within sectors (hours effect); (4) different population structures (population effect). Although sector allocation is extremely contrasted, with very few migrants in the public sector and very few urban residents working as self-employed, the sectoral effect is not robust to the path followed for the decomposition. We show that the migrant population has a comparative advantage in the private sector: increasing its participation into the public sector does not necessarily improve its average earnings. The opposite holds for the urban residents. The second main finding is that population effect is significantly more important than wage or hours effects. This implies that the main source of disparity is pre-market (education opportunities) rather than on-market.
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Paper provided by Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure in its series Working Papers with number
0808.
Find related papers by JEL classification: J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population
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