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Migrants as second-class workers in urban China? A decomposition analysis

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Author Info

  • 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)

Abstract

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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Bibliographic Info

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.

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Length: 34 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:gat:wpaper:0808

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Keywords: chinese labor market; discrimination; earnings differentials; migration;

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References

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  1. Loren Brandt & Carsten A. Holz, 2006. "Spatial Price Differences in China: Estimates and Implications," Economic Development and Cultural Change, University of Chicago Press, vol. 55, pages 43-86.
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