Research On Industry Wage Differential Of Cities In China

Income differential has expanded gradually with reform and opening in China. Gini coefficient in the city has exceeded 0.4, the level of international red warning line. There was great differential of wages in different kinds of economic styles and industries. This paper tries to argue that administration monopoly is the prime reason, which leads to wage gap between different industries. Furthermore, it analyses the harm of administration monopoly, uses the theories of Labor markets segmentation and Western Economic to discuss social welfare impairment.Using data from macro statistics and micro survey, the authors validate and estimate the increasing industry wage differential by calculating Theil index, coefficient of variance in the city. Then the Granger cause test result is that industrial monopoly is the cause of differential in industrial comparative wage. Non-agricultural industries are classified to monopoly and non-monopoly ones according to the degree of monopoly. Wage equations are estimated respectively to examine the contribution of individual traits to income. The result is that rate of return to education in monopoly industry is higher, skills and experience can represent equally on wages in non- monopoly industry. Then the unemployment risks are analyzed comparatively in ways of logistic regression, the laborers in monopoly industry has lower risk. Finally wage differential in monopoly and non-monopoly industries are decomposed by Oaxaca-Blinder method, which indicates 48.37% of the industry wage differential between monopoly and non-monopoly industries can be explained by individual characters, 51.63% unexplained. That means industrial discrimination exists. It comes to the conclusion that the solution of monopoly segmentation in labor market is the key to reducing industry wage differential in the city.