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| 1 |
ID:
168361
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| Summary/Abstract |
Distortions in the capital market are notable in developing economies like China. By building up a dual production structure with oligopolistic competition in urban manufacturing, this paper investigates the distributional and welfare effects of capital market distortions. We find that in the short run, an increase in the capital market distortion in favor of urban firms can lower both the skilled and unskilled wages. However, in the long run, the preferential policy on reducing capital cost to the urban sector attracts new entry of firms, which can worsen the skilled-unskilled wage inequality in the economy. This firm-entry effect of the capital market distortion on wage inequality is empirically confirmed for China.
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| 2 |
ID:
163515
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| Summary/Abstract |
This study examines the city-size wage premium (CSWP) for local urban hukou holders (citizens) and rural migrants by utilizing data from the Chinese Household Income Project surveys (CHIP 2002 and 2013) employing OLS and Propensity Score Matching method. Heterogeneity of skills (measured by level of education) is found to be one determinant of the city-size wage disparity. But irrespective of skills, citizens receive a higher city-size premium than the rural migrants; nevertheless, the premium received by rural migrants has increased over the past few years. Within the similar occupation and type of firm, a highly skilled citizen received a CSWP of Yuan 880.08 in 2013 (Yuan 347.48 in 2002) on average per month. Whereas, a highly skilled rural migrant received an average monthly premium of Yuan 601.71 in 2013, and an insignificant premium in 2002. The corresponding values for low skilled citizens and rural migrants in 2013 are Yuan 415.67 and 267.27 respectively. Our results establish that there has been a positive effect on rural migrants from the relaxation of policies and labour laws, and a move towards equalization within the same level of skills.
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| 3 |
ID:
147433
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| Summary/Abstract |
Our paper reconciles the debated literature on the role of the Chinese unions by exploring the heterogeneous effects of unionization on wages in firms with and without political connections. We utilize a survey of 1268 firms in 12 cities to verify our hypothesis that wages increase due to unionization, but this union wage effect is significantly depressed by firms' political connections. Through a detailed analysis of the mechanism behind the empirical results, we conclude that unions increase workers' wages by strengthening the bargaining power of workers, while this bargaining power can be weakened by firms' political connections. Our main conclusion is robust to a series of robustness checks. Moreover, the results from quantile regressions inform us that the union wage effect and the role of political connections may vary along with the firms' wage distribution. Our findings suggest that the solution to further increase wages for low-wage workers and reduce wage inequality is to make the labor union an independent organization which can freely bargain with firms in terms of workers' wages and benefits, rather than an agency subordinate to the government whose role can be affected by the government support and undermined largely by firms' political connections.
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| 4 |
ID:
159025
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| Summary/Abstract |
The paper studies the levels and changes in wage inequality among Chinese rural-urban migrants during 2002–2007. Using data from two waves of national household surveys, we find that wage inequality among migrants decreased significantly between 2002 and 2007. Our analysis on the wage distribution further shows that the high-wage migrants experienced slower wage growth than middle- and low-wage migrants—a primary cause of declining inequality of migrants. By using distributional decomposition methods based on quantile regression, we find that an overall between-group effect dominates in the whole wage distribution, which means that the change in returns to the characteristics (education, experience and other employment characteristics) plays a key role, but on the upper tails of the wage distribution, the within group effect (residual effect) dominates, implying that the unobservable factors or institutional barriers do not favor the migrants at the top tail of the wage distribution. We also study wage differential between migrants and urban natives, and find that though the wage gap is narrowed, the gap at the upper wage distribution is becoming bigger. Overall, the results suggest that there exists a strong “glass ceiling” for migrants in the urban labor market.
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| 5 |
ID:
182727
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| Summary/Abstract |
How does participating or moving to more upstream in the global value chains (GVCs) affect the premium paid to skilled compared to unskilled labor within firms? In this paper, we develop a model of heterogeneous firms with intermediate trade and two skill inputs, in which we apply the fair wage hypothesis to predict the wage premium changes according to firms' GVCs activities. The model predicts that firms' backward GVC participation, as measured by the share of foreign value-added content in exports (FVAR), has an ambiguous impact on wage inequality of skills, which depends on the relative importance of “FVAR-labor substitution effect” and “FVAR-profit effect.” However, moving to upstream sectors in GVCs, as measured by the export varieties' upstreamness (or average distance from final use), raises a firm's wage premium. Using detailed Chinese firm-level data from 2000 to 2006, we develop a Mincer-type empirical model to study the wage premium changes associated with FVAR and upstreamness. We find robust empirical evidence that the rise of wage inequality in China mainly arises from moving to more upstream sectors rather than changing GVC participation.
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| 6 |
ID:
149763
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| Summary/Abstract |
In China, rural migrant workers usually cannot get fair treatment due to the hukou system. This paper investigates how hukou system reforms affect the skilled-unskilled wage inequality through the general equilibrium approach. In the basic model, we find that an increase in the strength of hukou system reforms will narrow down the wage inequality if the urban skilled sector is more capital intensive than the urban unskilled sector. In addition, we separately extend the basic model by introducing the endogenous minimum wage and an informal sector, and find that in these two extended cases the main results of the basic model will conditionally or unconditionally hold. When we consider some empirical evidences in China, our models predict that an increase in the strength of hukou system reforms will reduce the wage inequality.
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| 7 |
ID:
112715
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| Publication |
2012.
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| Summary/Abstract |
We use three waves of urban household survey from 1995 to 2007 to investigate the trends of residual inequality and its determinants. First, we find that the enlargement in both the overall and residual inequality was larger at the upper half of the wage distributions between 2002 and 2007. Between 1995 and 2002, however, it is the lower half that experienced larger increase in inequality. Second, by using two complementary semi-parametric methods, we find that composition effect is negligible. Instead, the change in skill prices plays a dominant role in the rise of residual inequality. Finally, by constructing a panel data at the city level, we find that ownership restructuring is an important factor that has caused the skill price to rise, especially in the earlier period. Another finding is that China's export share of GDP has a positive effect on the enlargement of residual wage inequality, especially in the period from 2002 to 2007.
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| 8 |
ID:
159072
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| Summary/Abstract |
This paper, based on data from China after its membership into the World Trade Organization (WTO), shows the co-existence of a fluctuating skill premium and rises in wages for both skilled and unskilled labor. Our research provides one specific factor, the tariff reduction biased toward unskilled labor-intensive sectors, to explain and quantify the magnitudes of skill premium dynamics using the mandated-wage approach. The empirical evidence indicates that sector-biased tariff reductions have widened wage inequality in China through their effect on product prices. World price competition, on the other hand, has contributed to declining wage inequality via product prices, which is consistent with the endowment-based expectations of China's integration into the more skilled-labor abundant world.
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| 9 |
ID:
165599
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| Summary/Abstract |
The transition from Fordism to the knowledge economy in the world’s advanced democracies was underpinned by the revolution in information and communications technology (ict). The introduction and rapid diffusion of ict pushed up wages for college-educated workers with complementary skills and allowed top managers and CEOs to reap greater rewards for their own talents. Despite these common pressures, income inequality did not rise to the same extent everywhere; income in the Anglo-Saxon countries remains particularly unequally distributed. To shed new light on this puzzle, the authors carry out a panel data analysis of eighteen oecd countries between 1970 and 2007. Their analysis stands apart from the existing empirical literature by taking a comparative perspective. The article examines the extent to which the relationship between the knowledge economy and income inequality is influenced by national labor market institutions. The authors find that the expansion of knowledge employment is positively associated with both the 90/10 wage ratio and the income share of the top 1 percent, but that these effects are mitigated by the presence of strong labor market institutions, such as coordinated wage bargaining, strict employment protection legislation, high union density, and high collective bargaining coverage. The authors provide robust evidence against the argument that industrial relations systems are no longer important safeguards of wage solidarity in the knowledge economy.
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| 10 |
ID:
107484
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| Publication |
2011.
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| Summary/Abstract |
This paper investigates the evolution of interprovincial wage inequality and the causes behind its increase over the last two decades. We focus more specifically on the impact of export-led-market reforms on wages disparities within and between five firm types in China. When measured with the GE(1) index, overall wage inequality among Chinese provinces increased by 50% between 1993 and 2007, most notably during the early 1990s as China accelerated its integration into the world economy. The inequality analysis by firm type suggests that increased international competition has had a large impact on wage inequality among domestic firms but almost none on inequality among foreign firms. The panel analysis conducted in this paper also suggests that factors enhancing labor productivity such as larger capital stock endowment per worker and better infrastructure endowment have a greater impact on wage inequality than an increase in economic integration, particularly for domestic firms located in the interior region.
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| 11 |
ID:
143402
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| Summary/Abstract |
Earnings inequality and earnings determination in urban China 2002 and Russia 2003 are compared by using samples covering large parts of the two countries. The results from estimated earnings functions are put in perspective of the outcome from a similar comparison made at the end of the 1980s. We confirm that earnings inequality has increased rapidly in both countries and is found to be similar across countries. As at the end of the 1980s, the gender wage gap is larger in Russia where earnings reach a maximum at a lower age than in China. The association between education and income in China has increased to become stronger than in Russia. The earnings penalty of being employed in the public service sector in Russia has increased while the publically employed in China enjoy a positive payoff of limited magnitude.
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