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

32 Pages Posted: 28 Feb 2003

See all articles by Margaret Maurer-Fazio

Margaret Maurer-Fazio

Bates College - Department of Economics; IZA Institute of Labor Economics

Ngan Dinh

University of Chicago - Division of Social Sciences

Multiple version iconThere are 2 versions of this paper

Date Written: June 2, 2002


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.

Keywords: wages, China, unemployment, discrimination, transitional economies, employment determination, labor

JEL Classification: J20, J22, J31, J64, J71, O15, O53, P23, P36

Suggested Citation

Maurer-Fazio, Margaret and Dinh, Ngan, Differential Rewards to, and Contributions of, Education in Urban China's Segmented Labor Markets (June 2, 2002). William Davidson Institute Working Paper No. 508. Available at SSRN: https://ssrn.com/abstract=346505 or http://dx.doi.org/10.2139/ssrn.346505

Margaret Maurer-Fazio (Contact Author)

Bates College - Department of Economics ( email )

276 Pettengill Hall
4 Andrews Road
Lewiston, ME 04240
United States
207-786-6087 (Phone)
207-786-8338 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072

Ngan Dinh

University of Chicago - Division of Social Sciences ( email )

774 International House
1414 East 59th Street
Chicago, IL 60637
United States

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