Earnings Differentials and Ownership Structure in Chinese Enterprises.

The article aims to provide an 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. Earnings differentials among enterprises of different ownership are investigated. The proportion of observed earnings gaps that can be attributed to differences in characteristics of workers, differences in hours worked and incomplete labor market integration are studied. The structure of the Chinese labor market after ten years of reforms is also analyzed. Instead of privatizing state-owned enterprises, the Chinese government has chosen to reform the state sector while at the same time encouraging the emergence of a competing nonstate sector, especially through preferential policies toward foreign direct investment.