(College of Economics and Management, Nanjing Agricultural University; China Center for Food Security Research)
Abstract: As an important participant in the urban labor market, rural migrant workers have made great contributions to the economic prosperity and social development in the urban regions. However, there exists an obvious contrast between the gains of rural migrant workers and the contributions they have made and the pains they have sustained, the most prominent being the big wage gap between the rural migrant workers and their urban counterparts. The ‘urban bias’ policy which has long been in place in this country has brought about a number of consequences, the huge difference in educational quality between urban and rural regions in particular. This difference has evidently led to heterogeneous human capital, which has in turn caused wage differential after the respective entry into the urban labor market by the rural vs. urban labor forces. While most of the studies to date which have analyzed wage differential are based on the mean value level of wage differential decomposition, the quantile decomposition method of wage differential used in this paper is able to analyze the variation of wage differential at different wage distribution locations, and hence to provide more basic and comprehensive information about wage differential.
This paper analyzes the wage differential between urban and rural labors by means of the method of quantile regression and decomposition, which, having taken into consideration the educational quality, is based on the China Labor Force Dynamics Survey data in 2012. The result of quantile regression shows that educational quality exerts a significant effect on the wages earned by the middle-income group, which, however, is encountered with the least discrimination in terms of their urban vs. rural regional household registration status, as compared with all other income groups at the same time. Further quantile decomposition finds that there exists an asymmetric phenomenon in the wage differential between the two types of labor forces at different wage distribution locations.
As wage distribution location goes from low to high, wage differential between the two types of labor forces first falls down to the bottom and then rises up to the top. The wage differential between the two types at the bottom of wage distribution locations is smaller than that at the top. And there exists a ‘Glass Ceiling’. This curve reveals that the wage differential between the two types of labor forces is mainly caused by difference in individual characteristics, while the discrimination in the urban vs. rural regional household registration status also has a role.
Based on the above conclusion, the paper suggests that the government should speed up the reform of the dual household registration system, and build up an employment environment of fairness and justice. In the meantime, strong measures should be taken to promote vocational training and continuing education, which works well to increase the human capital of rural migrant workers, and to explore all available channels for the all-round improvement of rural labor quality.
Key Words: Urban and Rural Labor; Wage Differential; Quantile Decomposition; Educational Quality; Urban vs Rural Regional Household Registration Discrimination