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Earnings Differentials and Ownership Structure in Chinese Enterprises

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  • 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.

Suggested Citation

  • Chen, Yi & Demurger, Sylvie & Fournier, Martin, 2005. "Earnings Differentials and Ownership Structure in Chinese Enterprises," Economic Development and Cultural Change, University of Chicago Press, vol. 53(4), pages 933-958, July.
  • Handle: RePEc:ucp:ecdecc:y:2005:v:53:i:4:p:933-58
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    Cited by:

    1. Démurger, Sylvie & Gurgand, Marc & Li, Shi & Yue, Ximing, 2009. "Migrants as second-class workers in urban China? A decomposition analysis," Journal of Comparative Economics, Elsevier, vol. 37(4), pages 610-628, December.
    2. Jin Song & Shi Li, 2010. "Ownership and Earnings Inequality in Urban China," Frontiers of Economics in China, Higher Education Press, vol. 5(4), pages 582-603, December.
    3. Sylvie Dmurger & Martin Fournier & Li Shi & Wei Zhong, 2006. "Economic Liberalization with Rising Segmentation in China's Urban Labor Market," Asian Economic Papers, MIT Press, vol. 5(3), pages 58-101, Fall.
    4. 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.
    5. Combes, Pierre-Philippe & Démurger, Sylvie & Li, Shi, 2015. "Migration externalities in Chinese cities," European Economic Review, Elsevier, vol. 76(C), pages 152-167.
    6. Xin Meng & Chris Manning & Li Shi & Tadjuddin Nur Effendi (ed.), 2010. "The Great Migration," Books, Edward Elgar Publishing, number 13619, April.
    7. Yi CHEN & Sylvie DEMURGER & Martin FOURNIER, 2004. "Différentiels salariaux, segmentation et discrimination à l’égard des femmes sur le marché du travail chinois," Working Papers 200426, CERDI.
    8. Cui, Yuling & Nahm, Daehoon & Tani, Massimiliano, 2013. "Earnings Differentials and Returns to Education in China, 1995-2008," IZA Discussion Papers 7349, Institute for the Study of Labor (IZA).
    9. 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.
    10. Pierre-Philippe Combes & Sylvie Démurger & Shi Li, 2015. "Migration Externalities in China," Sciences Po publications info:hdl:2441/l4oaogsnr9r, Sciences Po.
    11. 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.
    12. Yuanyuan Chen & Shuaizhang Feng, 2011. "Parental education and wages: Evidence from China," Frontiers of Economics in China, Springer;Higher Education Press, vol. 6(4), pages 568-591, December.
    13. Kritkorn Nawakitphaitoon & Xuan Chen & Yuhao Ge, 2016. "State and Non-state Earnings Differentials over Time in China’s Urban Labor Market: Evidence from the Urban Household Survey (1994–2007)," Journal of Labor Research, Springer, vol. 37(3), pages 287-316, September.
    14. 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.
    15. Rickne, Johanna, 2013. "Labor market conditions and social insurance in China," China Economic Review, Elsevier, vol. 27(C), pages 52-68.
    16. Elliott, Robert J.R. & Zhou, Ying, 2015. "Co-location and Spatial Wage Spillovers in China: The Role of Foreign Ownership and Trade," World Development, Elsevier, vol. 66(C), pages 629-644.
    17. Combes, Pierre-Philippe & Démurger, Sylvie & Li, Shi, 2015. "Migration externalities in Chinese cities," European Economic Review, Elsevier, vol. 76(C), pages 152-167.
    18. Sylvie DÉMURGER & Martin FOURNIER & Yi CHEN, 2007. "The Evolution Of Gender Earnings Gaps And Discrimination In Urban China, 1988-95," The Developing Economies, Institute of Developing Economies, vol. 45(1), pages 97-121.
    19. Démurger, Sylvie & Li, Shi & Yang, Juan, 2012. "Earnings differentials between the public and private sectors in China: Exploring changes for urban local residents in the 2000s," China Economic Review, Elsevier, vol. 23(1), pages 138-153.
    20. Laura Hering & Sandra Poncet, 2010. "Market Access and Individual Wages: Evidence from China," The Review of Economics and Statistics, MIT Press, vol. 92(1), pages 145-159, February.
    21. Lee, Leng, 2012. "Decomposing wage differentials between migrant workers and urban workers in urban China's labor markets," China Economic Review, Elsevier, vol. 23(2), pages 461-470.

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