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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

    ()

  • Ngan Dinh

    ()

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.
    3. Roberts, Kenneth D., 2001. "The determinants of job choice by rural labor migrants in Shanghai," China Economic Review, Elsevier, vol. 12(1), pages 15-39.
    4. John Knight & Lina Song & Jia Huaibin, 1999. "Chinese rural migrants in urban enterprises: Three perspectives," Journal of Development Studies, Taylor & Francis Journals, vol. 35(3), pages 73-104.
    5. Meng, Xin & Zhang, Junsen, 2001. "The Two-Tier Labor Market in Urban China: Occupational Segregation and Wage Differentials between Urban Residents and Rural Migrants in Shanghai," Journal of Comparative Economics, Elsevier, vol. 29(3), pages 485-504, September.
    6. C Cindy Fan, 2001. "Migration and labor-market returns in urban China: results from a recent survey in Guangzhou," Environment and Planning A, Pion Ltd, London, vol. 33(3), pages 479-508, March.
    7. Xin Meng, 2004. "Economic Restructuring and Income Inequality in Urban China," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 50(3), pages 357-379, September.
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    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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