Wage Differential between Rural Migrant and Urban Workers in the People’s Republic of China

Asian Development Review 37:1, 2020

18 Pages Posted: 10 Apr 2020

See all articles by Hong Cheng

Hong Cheng

Wuhan University

Dezhuang Hu

Wuhan University

Hongbin Li

Stanford University

Date Written: March 16, 2020

Abstract

Using a recently constructed data-set that draws on the China Employer – Employee Survey, this paper provides new evidence on the earnings gap between rural migrant and urban manufacturing workers in the People’s Republic of China. When we only control for province fixed effects, we find that rural migrant workers are paid 22.3% less per month and 32.2% less per hour than urban workers. We find that the gap in hourly earnings is larger than the gap in monthly earnings because rural migrant workers tend to work an average of 5.6% more hours per month than urban workers. Using these data, we also find that 87.4% of the monthly earnings gap and 73.9% of the hourly earnings gap can be attributed to differences in the individual characteristics and human capital levels of rural migrant and urban workers. Furthermore, we find that this unexplained earnings gap varies among different groups of workers. The earnings gap is much larger

(i) for workers in state-owned enterprises than in non-state-owned enterprises,

(ii) for college-educated workers than workers with lower levels of educational attainment, and

(iii) in Guangdong province than in Hubei province.

Keywords: China Employer–Employee Survey, Rural Migrant Workers, Wage Gap

JEL Classification: O15, J01, J31

Suggested Citation

Cheng, Hong and Hu, Dezhuang and Li, Hongbin, Wage Differential between Rural Migrant and Urban Workers in the People’s Republic of China (March 16, 2020). Asian Development Review 37:1, 2020, Available at SSRN: https://ssrn.com/abstract=3555399

Hong Cheng

Wuhan University ( email )

Wuhan
China

Dezhuang Hu (Contact Author)

Wuhan University

Wuhan
China

Hongbin Li

Stanford University ( email )

Stanford, CA 94305
United States

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