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

  • Sylvie Démurger

    ()

    (HIEBS - Hong Kong Institute of Economics and Business Strategy - University of Hong Kong, GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon)

  • Marc Gurgand

    (CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)

  • Shi Li

    (Beijing Normal University - Beijing Normal University, School of Economics and Business Administration - School of Economics and Business Administration - Beijing Normal University)

  • Yue Ximing

    (Renmin University of China - Renmin University of China)

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 HAL in its series Post-Print with number halshs-00269119.

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Date of creation: 2008
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Handle: RePEc:hal:journl:halshs-00269119
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