Analysis Of Informal Employment Income Difference

Labor is a necessary method for people’s living. It is the key to maintain economic and socialdevelopment, and improve people’s living standards. Since reforming and opening up in china,informal employment has been gradually developing. So far, it has become a significant factorinfluencing the employment and economic development of the country. The research of theinformal employment has caused great concern in academic world, especially the problem ofinequality of income. This essay use the household survey data which offered in CHNS in2009tostudy the average revenue difference between informal employment and formal employment and itsinfluencing factors on different quantile levels.Through analysis of individual characteristics, lower characteristic as well as the socialcharacteristics, establish the wages equation to do empirical analysis. Through microscopic point ofview to observe the underlying causes of the different types of employment income differences. Thestudy of the problem of income disparities is an old topic. There were a lot of literatures on it. Onthe basis of the farmer study, the paper starting from the basis definition of informal employment,research the scale and significant of informal employment under the current economic and socialdevelopment environment. Putting forward the reasons resulting in the income difference betweenthe informal and formal employment are labor market segmentation comparative advantage theoryand internal stratification theory. Followed by the description of the finding of the2009“Chinahealth and nutrition survey（CHNS）”is higher than the formal employment in the income.By observing the miner’s average income of wage income equation regress and quantileregression of the types of employment, I found the significant income differences not only exist inthe average income, but also exist in the different income levels. Whereas, the income differencedifferences from different income levels in degrees, two regression analysis the incomedecomposition can see two types of employment, informal and formal employment due to thepresence of significant labor market segmentation has led to differences in average income, andfurther decompose quantile regression results.Because of the segmentation in the labor market, inorder to live, the worker is forced to join the informal employment; while in the high-income class,some workers’ employment options are pursing for the individual utility maximization. Monetary factors are not the first factor. Therefore, the difference is smaller in the high income class.Finally,through the quantization analysis results, we can get the main factors affecting the two types ofemployment and can find the root causes of the different types of employment, which helps to solvethe problem of the low level income of informal employment and reducing the income differences.