Earnings Differentials and Ownership Structure in Chinese Enterprises

44 Pages Posted: 5 Apr 2004

See all articles by Yi Chen

Yi Chen

Université d'Auvergne - Clermont 1 - Centre d'Etudes et de Recherches sur le Developpement International (CERDI)

Sylvie Démurger

University of Lyon 2 - Groupe d'Analyse et de Théorie Economique (GATE)

Martin Fournier

University of Lyon 2 - Groupe d'Analyse et de Théorie Economique (GATE)

Abstract

This paper analyses the determinants of earnings differentials among enterprises of different ownership in urban China in 1995, using an extended version of Oaxaca-Blinder decomposition methods. We find strong evidence of a non integrated multi-tiered labor market in China, pure ownership-related differences and differences in hours worked being the major determinants of observed earnings gaps. Our results highlight different paying schemes among domestic enterprises as well as between domestic and foreign enterprises. We stress the dual nature of domestic production structures, workers in central state-owned enterprises being highly protected as compared to other domestic enterprises. We also emphasize that foreign-invested enterprises provide higher total annual earnings mostly at the cost of a much longer working time and do not offer higher hourly earnings than large state-owned enterprises. Our results provide explanations for the very low labor mobility observed out of the large overstaffed SOEs in the 90s, which has led to massive lay-offs at the end of the decade.

Keywords: Labor market, earnings differentials, segmentation, enterprise ownership, China

JEL Classification: J31, J42, P23, O53

Suggested Citation

Chen, Yi and Démurger, Sylvie and Fournier, Martin, Earnings Differentials and Ownership Structure in Chinese Enterprises. Economic Development and Cultural Change, Vol. 53, No. 4, pp. 933-958, July 2005. Available at SSRN: https://ssrn.com/abstract=524442

Yi Chen

Université d'Auvergne - Clermont 1 - Centre d'Etudes et de Recherches sur le Developpement International (CERDI) ( email )

65 Boulevard Francois Mitterrand
63000 Clermont-Ferrand Cedex 1
France

Sylvie Démurger (Contact Author)

University of Lyon 2 - Groupe d'Analyse et de Théorie Economique (GATE) ( email )

93, chemin des Mouilles
Ecully, 69130
France
(33 4) 72 86 61 05 (Phone)
(33 4) 72 86 60 90 (Fax)

HOME PAGE: http://www.gate.cnrs.fr/spip.php?article22

Martin Fournier

University of Lyon 2 - Groupe d'Analyse et de Théorie Economique (GATE) ( email )

93, chemin des Mouilles
Ecully, 69130
France

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