Technical Report Industrial Segregation and Wage Gaps between Migrants and Local Urban Residents in China:2002-2013

Ma, Xinxin  ,  Li, Shi

2016-05 , Institute of Economic Research, Hitotsubashi University
This paper explores industrial segregation and its impact on the wage gaps between rural-to-urban migrants and local urban residents in China. Using the Chinese Household Income Project (CHIP) 2002 and 2013 surveys, we analyzed the probabilities of entry to various industries for both migrant and local urban resident groups; using the model of Brown et al. (1980), we then undertook a decomposition analysis of the wage gaps. Several major conclusions emerge. First, although inter-industry differentials and intra-industry differentials both affect the wage gap between migrants and local urban residents, the effect of intra-industrial differentials is greater in both 2002 and 2013. Second, in considering the effect of intra-industry differentials, while the influence of explained differentials is greater than that of unexplained differentials in both 2002 and 2013, the influence of the unexplained component of the intra-industrial differentials rises steeply from 19.4% (2002) to 68.0% (2013). The results show that when other factors are held constant, the problem of discrimination against migrants in a given industry is becoming more serious. In addition, the influence of the explained component of the intra-industry differentials rises from 61.2% (2002) to 77.7% (2013).

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