Earnings differentials and ownership structure in Chinese enterprises

The objective of this article is to provide a broad overview of the forces at work in the Chinese urban labor market, using a database that allows for a better evaluation of direct nonwage benefits and taking into account differences in hours worked. We investigate earnings differentials among enterprises of different ownership and evaluate how much of observed earnings gaps can be attributed to differences in characteristics of workers, differences in hours worked, and incomplete labor market integration. Doing so, the article helps to shed light on the structure of the Chinese labor market after 10 years of reforms, on the extent to which the labor market had become market forces - driven, and on the potential explanations for the strong inertia affecting employment in overstaffed and loss-making SOEs. © 2005 by The University of Chicago. All rights reserved.