Social Sciences in China (Chinese Edition)

No.6, 2014

 

Household Registration, Occupational Segregation and Income Inequality in Urban China

(Abstract)

 

Wu Xiaogang and Zhang Zhuoni

 

On the basis of data from China’s 2005 one percent large sample survey of population, we compare the part played by unequal pay for equal work as against that of the institutional barrier of occupational segregation in income inequality between migrant workers and workers with urban registration (urban workers). The results show that the commonly observed phenomenon of migrant workers’ earning less than urban workers is mainly caused by occupational segregation based on the household registration (hukou 户口) system rather than by direct labor market discrimination involving unequal pay for equal work. The unbalanced opportunity structure between urban and rural areas, especially the great inequality of educational opportunities in the latter, is the main reason for occupational segregation between migrant workers and urban workers. Using propensity score matching to compare migrant workers with urban workers with the same background, we find that migrant workers earn less than urban workers in Party and government bodies and public service units; conversely, they earn more than urban workers in state-owned, collective and private enterprises. This indicates that if we are to improve the economic and social status of migrant workers in urban areas, we need to change the urban/rural imbalance in educational opportunity and at the same time eliminate occupational barriers to entry for rural workers, to ensure equal opportunity in the labor market.