Wage Differentials Between Monopoly Industries And Non-monopoly Industries

Since the reform and opening up, the income of Chinese urban residents is rising, with the trend that the income differences tend to continually expand. Expansion of income gap has an important influence on the healthy development of economy and building a harmonious society and realization of social justice and efficiency. According to the theory of labor economics, individual wages are closely related not only to individual characteristics but also which industry its occupation in, various industries and occupational wage differences still remain. In most instances, main part of the wage differentials between different industries can be rationally explained through individual characteristics and preferences, but there still are partial differences that economic theory can not explain, such as gender discrimination, racial discrimination, economic cycle fluctuations and industrial monopolies and so on.In the measurement of wage differentials, Blinder (1973) and Oaxaca (1973) proposed to decompose the wage differentials into two kinds of differences caused by the formation of individual characteristics and group attributes, selecting a different reference group may lead to different decomposition results. In 1988, Cotton put forward a new decomposition method based on the Oaxaca-Blinder. Cotton classify the formation of discrimination into two parts: differences caused by the bias to favorable groups and differences caused by direct discrimination to unfavorable groups. He believes that discrimination in the labor market will make the wages of a group lower, while the other group was elevated. It should first calculate the equilibrium revenue in non-discriminatory environment, and then measure the discriminated against groups opposed to non-discriminatory environment. In 1996, Neal and Johnson made the conditions and the mean model of wage differentials, a comprehensive analysis of different groups of workers entering the labor market before and after the different treatment of the wage differentials.In recent years, scholars study wage differentials between monopoly industries in China and non-monopoly industry from different angles and the results show that large wage differentials between industries in China. However, most of these studies remain in the statistical analysis and is rarely used the measurement method in empirical analysis. Based on labor force survey microdata in Northeast, this paper applied the measurement methods to made wage equation regression in monopoly industries and non-monopoly industry and made decomposition of wage differences between industries, then analyzed the main reasons leading to the industry wage differentials.This paper divided 98 industry categories into non-monopoly industry and monopoly industry and used mean and standard deviation to make the basic statistical description to the data of the two types of industries. According to the previous research on wages, we usually use level of education, work experience and gender as explanatory variables of the wage equation. This paper chose years of education, work experience, work experience squared, gender, occupation type, household nature as explanatory variables and made wage equation regression to two types of industry. Taking into account sample selection bias problem, this paper applied two-step method of Heckman to make wage equation regression. That is the choice model is estimated at first and calculate the inverse Mills ratio as sample selection bias correction. Then make it as an explanatory variable to the wage equation , and make the regression of the wage equation. Reference quantile regression proposed by Koenke and Bassett (1978), this paper make wage equation regression to non-monopoly industry and monopoly industries and analyze the main factors of the different income groups.Reference Oaxaca-Blinder decomposition method on the wage gap, this paper applied the wage equation OLS regression to decompose wage differentials between the monopoly industries and non-monopoly industry. Wage differentials between monopoly industry and non-monopoly industry can be decomposed into the differences due to individual characteristics and the wage differentials due to monopoly. The former is that if the monopoly granted to the industry returns of the non-monopoly industry, wage differences is still existed. That is the differentials related to educational level, gender, work experience, type of occupation factors between monopolistic industries and non-monopoly industry. The wage differential is usually regarded as the industry wage differentials can be explained; the latter is from the returns difference of individual, which is the part that can not be explained. The analysis revealed characteristic differences in wages differences in industry wages accounted for 62% of the total differentials, discrimination and wage differentials due to industry monopoly accounted for 37% of the total differentials.In order to analyze the industry wage differentials in different sub-sites of the wage distribution, this paper used wage equation quantile regression results to decompose wage differentials of the monopoly of industry and non-monopoly industry in the different points of the wage distribution sites and analyze the main reasons lead to the industry wage differentials. Nuclear-weighted local polynomial smoothing method makes the total synthesis of the wage differentials caused by the different characteristics, wage differentials caused by monopoly of industry and the total wage differentials to be smooth curves. By analyzing the curve shape it can be found with the sub-digit increase, industry wage differentials caused by characteristic differences showing a rising trend, and that wage differentials caused by monopoly of industry first increased and then showed a downward trend, so in low-income groups, industry wage differentials caused mainly by monopoly of industry, while in the high-income groups, industry wage differentials come from the different individual characteristics between the two groups.Therefore, the Government's wages regulation in monopoly industries will help to inhibit the inter-industry wage differentials continued to rise. The study results will help us to understand the decide of the wage labor market, and provide useful lessons to the evaluation of government sector wages.