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Monopoly Industrial Sector and Its Influence on the Wage Gaps Between Migrants and Local Urban Residents

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Economic Transition and Labor Market Reform in China

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Abstract

Although Chinese government has promoted the privatization of state-owned enterprises since the end of the 1990s, in the important industry sectors, which are related to the country’s security and economy, the Chinese government has enforced management and control by financing preferential policies and industry entry regulations. Particularly, a set of macroeconomic stimulation policies after the global financial crisis of 2007–2008 concentrates the government public investment support for these monopolistic industry sectors. Thus there exists segmentation between the monopoly industry sector and competitive industry sector. In addition, there also exists a segmentation between the migrants and local urban residents by the Hokou system (registration system) in China. Chapter 4 considers the two kinds of labor market segmentation, and investigates how the industry sector segmentation influences the wage gap between the migrants and local urban residents. It is found that the individual productivity characteristic differentials (e.g. human capital) in the same industry sector is the main factor causing the wage gaps in both 2002 and 2013, and the problems of discrimination against migrants in the same industry sector become more serious from 2002 to 2013.

This chapter is a revised version of Ma, X. (2018). Labor Market Segmentation by Industry Sectors and Wage Gaps between Migrants and Local Urban Residents in Urban China. China Economic Review, 47, 96–115. Copyright ©: Elsevier.

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Notes

  1. 1.

    The regulations included food supply, house supply, education, employment, wage, public pension, and public health insurance systems, which are only available for local urban residents.

  2. 2.

    Cai and Bai (2006) and Li and Ding (2013) indicate that the housing system, education and health care service systems, the social security system, and the employment and wage systems are different for migrants and local urban residents.

  3. 3.

    The Chinese government promoted the “One Belt and One Road Initiative” policy since 2013. It includes many countries from Singapore to Syria, most of which are near the historic trade route known as the Silk Road. The Chinese government encourages active participation in overseas infrastructure investment and construction by exporting mechanical equipment.

  4. 4.

    Experience years = age-6-years of schooling.

  5. 5.

    For empirical studies on the industrial wage disparity, please refer to Cai (1996), Luo and Li (2007), Demurger et al. (2007), Jin and Cui (2008), and Ma (2012, 2014). They indicate that the wage level in the competitive industries is lower than that in the monopolistic industries when factors (e.g. education attainment, experience years) which can affect the wage are controlled.

  6. 6.

    In order to simplify the expression of equations all constant items are omitted.

  7. 7.

    Marital status, age, and age squared are used as identification variables in this study.

  8. 8.

    A sampling bias problem may exist in the migrant survey. In the survey of CHIPs 2002, and CHIPs 2013, only migrants officially registered and who were living in the urban area in the survey year can become the random selection sampling objectives; therefore most migrants who live in apartments near the workplace provided by firms may not be surveyed (Li et al. 2008).

  9. 9.

    Variable values are in the range of “mean value ± three times S.D.” which is defined as abnormal value here.

  10. 10.

    The numbers of industry categories are sixteen in the survey for local urban residents and twenty-five in the survey for migrants in CHIPs.

  11. 11.

    For the empirical studies on the wage gap between public and private sectors in China, please refer to Chen et al. (2005), Zhang and Xue (2008), Ye et al. (2011), Demurger et al. (2012), Zhang (2012), and Ma (2014, 2015, 2016b).

  12. 12.

    Gustafsson and Li (2000), Wu and Xie (2003), Knight and Yueh (2008), and Appleton et al. (2009) found that there remains a Communist Party member wage premium in China.

  13. 13.

    Gustafsson and Li (2000), Liu et al. (2000), Maurer-Fazio and Hughes (2002), Demurger et al. (2007), Ma (2007, 2009), Guo and Zhang (2010), Li and Yang (2010), Li et al. (2011), and Ma et al. (2013) analyzed the gender wage gaps based on the decomposition methods and found that the discrimination against women is the main factor in China.

  14. 14.

    Gustafsson and Li (2003, 2014), Li and Ding (2013), and Campos et al. (2016) point out the wage gap between the Han majority and non-Han majority in China, and the minority/majority income gap has widened rapidly during the economic transition period. However, Gustafsson and Li (2014) indicate there is no income gap between the Hui Muslim minority and Han majority in Ningxia rural region. These results show that the wage gap between the Hui Muslim minority and Han majority differs by region (e.g. minority region vs. national region, urban region vs. rural region).

  15. 15.

    Chen and Fleisher (1996), Chen and Groenewold (2010), Li and Haynes (2011), Song (2013), and Tian et al. (2016) indicate there remains regional income disparity in China and the wage level is higher for the Eastern region than for the Western and Central regions; they also point out that the regional income inequality expanded since the 1990s.

  16. 16.

    Based on the survey of new generation migrants conducted in 2010 by the National Bureau of Statistics (NBS), there are 84.87 million new generation migrants; the ratio of new generation migrants to total migrants was 58.4% in 2010 (Cai et al. 2011).

  17. 17.

    Based on the survey of new generation migrants conducted in 2010 by the NBS, the average years of schooling are longer for the new generation migrants (9.8 years) than for the first-generation migrants (8.8 years) (Cai et al. 2011).

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  1. Hitotsubashi University, Tokyo, Japan

    Xinxin Ma

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Ma, X. (2018). Monopoly Industrial Sector and Its Influence on the Wage Gaps Between Migrants and Local Urban Residents. In: Economic Transition and Labor Market Reform in China. Palgrave Macmillan, Singapore. https://doi.org/10.1007/978-981-13-1987-7_4

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  • DOI: https://doi.org/10.1007/978-981-13-1987-7_4

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