Wage Differentials Between Fixed-term Labor Contracts And Indefinite-term Labor Contracts

Labor Contract Law is an important part of the labor market system. Laborcontract system implementation intention is to protect the legitimate interests ofworkers."Labor Contract Law" has been controversial, researchers each holding views,and research focuses on theory, empirical research lacks.This dissertation uses the survey data from the Rural and urban mobilityinvestigation of China (abbreviates as Rumic).Firstly we divide the contract into twotypes, namely, the long-term labor contracts and short-term labor contracts basing onthe reviews of the past literatures and thus build the wage equation. Secondly we usethe probit model to regress the selective equation of the labor contract calculate theinverse Mills ratio, and add the inverse Mills ratio to the wage equation sampleselection bias correction, and then run the least squares regression, finally we use theOaxaca-Blinder decomposition methods to decompose wage differentials base on theprevious regression results. The results show that long-term labor contract workerwage is significantly higher than short-term labor contract workers wages, but thewage gap for2007and2008is still primarily a result of differences in human capital,contract type is actually accounted for31.78%, respectively, and16.36%, from2007to2008, the type of discrimination falls after the implementation of the contract.Bases on the study of different wage differentials term labor contracts, thedissertation further uses quantile regression method to study wage differentials onwage levels. We select5,10,25,50,75,90,95representative of sites studied, in order toobtain the degree of influence of different types of labor contracts on different groupsof workers. The results show a greater effect of different types of term labor contractsfor low-income workers, the impact of ultra-high-income workers is not significant. Therefore, the Labor Contract Law can indeed help to reduce the wage gap betweenworkers by strengthening the constraints on short-term labor contracts. Finally wesincerely hope that the results of this study can offer a basis and reference for thefuture development of China’s labor policies.