Has China Crossed the River? The Evolution of Wage Structure in Urban China During Reform and Retrenchment

Abstract

In this paper, we examine the determinants of urban wages in China from 1988 to 2002. We find increased returns to education but a decrease in the returns to experience. The 2002 data imply that the widening pure gender gap and the growth in the premium to Communist Party membership may have come to an end. The reform of the state-owned enterprise (SOE) sector and the shift in industrial structure out of heavy industry is shown to impact wages of workers within those sectors. We use recall panel data for 1998 to 2002 to provide fixed effects estimates of the impact of sector ownership, Communist Party membership and unemployment on wages.

Keywords: China, labor market, unemployment, panel data, wage premium, fixed effects estimations

JEL Classification: J31, J42, O15, P23