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Differential Rewards to, and Contributions of, Education in Urban China???s Segmented Labor Markets

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  • Margaret Maurer-Fazio

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  • Ngan Dinh

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Abstract

Education???s role in determining worker incomes in China???s rapidly changing urban labor markets is investigated in this paper. Using worker data from a 1999-2000 urban enterprise survey, we examine the effects of education on the current earnings of continuously-employed urban workers, migrants, and laid off but subsequently re-employed workers, as well as on the most recent earnings of laid-off (but not subsequently re-employed) workers. We also decompose the earnings differentials between each of these groups of workers and then assess the contribution of education to explanations of the differentials. The empirical results demonstrate that educational attainment remains an important explanator of earnings differentials between institutionally-differentiated groups of workers in China???s urban labor markets. An interesting hierarchy of returns to education has developed. The education of migrants is generally poorly rewarded. The moderate returns to educational investments of the continuously-employed urban residents rank next. Re-employed urban residents experience the highest rewards to their education, especially those who used a competitive means to find their post-layoff employment. When we assess the earning differentials between groups using the continuously-employed urban residents as the basis of comparison, differences in educational attainments alone contribute between 16 and 52 percent of the explanation of the total inter-group wage gaps.

Suggested Citation

  • Margaret Maurer-Fazio & Ngan Dinh, 2002. "Differential Rewards to, and Contributions of, Education in Urban China???s Segmented Labor Markets," William Davidson Institute Working Papers Series 508, William Davidson Institute at the University of Michigan.
  • Handle: RePEc:wdi:papers:2002-508
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    References listed on IDEAS

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    1. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
    2. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
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    Cited by:

    1. 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.
    2. Gagnon, Jason & Xenogiani, Theodora & Xing, Chunbing, 2009. "Are all migrants really worse off in urban labour markets: new empirical evidence from China," MPRA Paper 16109, University Library of Munich, Germany.
    3. Assar Lindbeck, 2008. "Economic-social interaction in China," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 16(1), pages 113-139, January.
    4. Risti Permani, 2009. "The Role of Education in Economic Growth in East Asia: a survey," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 23(1), pages 1-20, May.
    5. repec:eee:chieco:v:47:y:2018:i:c:p:96-115 is not listed on IDEAS
    6. Margaret Maurer-Fazio & Rachel Connelly & Lan Chen & Lixin Tang, 2011. "Childcare, Eldercare, and Labor Force Participation of Married Women in Urban China, 1982–2000," Journal of Human Resources, University of Wisconsin Press, vol. 46(2), pages 261-294.
    7. Jason Gagnon & Theodora Xenogiani & Chunbing Xing, 2014. "Are migrants discriminated against in Chinese urban labour markets?," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-23, December.
    8. 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.
    9. 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.
    10. Lindbeck, Assar, 2006. "Economic-Social Interaction during China’s Transition," Working Paper Series 680, Research Institute of Industrial Economics.
    11. Heywood, John S. & Siebert, W. Stanley & Wei, Xiangdong, 2009. "Job Satisfaction and the Labor Market Institutions in Urban China," IZA Discussion Papers 4254, Institute for the Study of Labor (IZA).
    12. Xing, Chunbing, 2016. "Human Capital and Urbanization in the People’s Republic of China," ADBI Working Papers 603, Asian Development Bank Institute.
    13. Gao, Wenshu & Smyth, Russell, 2011. "Economic returns to speaking 'standard Mandarin' among migrants in China's urban labour market," Economics of Education Review, Elsevier, vol. 30(2), pages 342-352, April.
    14. Jean-Louis ARCAND & Béatrice D'HOMBRES & Paul GYSELINCK, 2004. "Instrument Choice and the Returns to Education: New Evidence from Vietnam," Working Papers 200422, CERDI.
    15. Wenshu Gao & Russell Smyth, 2012. "Returns to Schooling in Urban China, 2001-2010: Evidence from Three Waves of the China Urban Labor Survey," Monash Economics Working Papers 50-12, Monash University, Department of Economics.
    16. Liu, C., 2018. "Reconciling Returns to Education in Off-Farm Wage Employment among Women in Rural China," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 276941, International Association of Agricultural Economists.
    17. Elaine Liu & Shu Zhang, 2013. "A Meta-Analysis Of The Estimates Of Returns To Schooling In China," Working Papers 201309855, Department of Economics, University of Houston.
    18. Nielsen, Ingrid & Smyth, Russell, 2008. "Who wants safer cities? Perceptions of public safety and attitudes to migrants among China's urban population," International Review of Law and Economics, Elsevier, vol. 28(1), pages 46-55, March.
    19. Dang, Thang, 2017. "Education as Protection? The Effect of Schooling on Non-Wage Compensation in a Developing Country," MPRA Paper 79223, University Library of Munich, Germany.
    20. Asadullah, Niaz & Xiao, Saizi, 2018. "Labor Market Returns to Education and English Language Skills in the People's Republic of China: An Update," IZA Discussion Papers 11809, Institute for the Study of Labor (IZA).
    21. Maurer-Fazio, Margaret & Connelly, Rachel & Thi Tran, Ngoc-Han, 2015. "Do Negative Native-Place Stereotypes Lead to Discriminatory Wage Penalties in China's Migrant Labor Markets?," IZA Discussion Papers 8842, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    wages; China; unemployment; discrimination; transitional economies; employment determination; labor;

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population
    • P36 - Economic Systems - - Socialist Institutions and Their Transitions - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty

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