Public-private Enterprises Wage Differentials

In recent years, with the competitive pressures in the labor market growing,compared with private enterprises, a good working environment and generousbenefits of public enterprises is causing great concern in the community. Hourlywages of public enterprises in1995,2002and2007are higher than private enterprisesby24.19%,26.64%and11.93%, investigate the causes for the wage differencesbetween public and private enterprises, help us to deepen the understanding of thelabor market operation rules.This paper firstly reviewed the theory of wage differentials and empirical researchmethods of wage differentials. Then it summarized empirical research achievementsof wage differentials. Through reviewing literatures, we knew the current foreignscholars has used from Heckman sample selection bias correction extended to doublethe sample selection bias correction in the data sample population mean correctionprocess (Heitmueller,2006). Machado and Mata decomposition method proposedsites at different points of the wage gap, and thus a more comprehensive analysis ofthe reasons for the wage differential wage distribution. Our scholar now has not usedthis method to study wage differentials of the public enterprises and privateenterprises. Although Chinese scholars have studied wage differentials of the publicsector and the private sector, this paper believe that recruitment and compensationsystem of our current government organs, institutions are different from themechanism of enterprises, thus we will study human capital differences anddiscrimination differences brought from ownership.Based on the Mincer wage equation, this paper used the extended double Heckmansample selection bias correction method to adjust the2007household income surveyof China, bringing the adjustments of labor force participation and the departmentselected to equation of public enterprises and private enterprises, then analyzed theresults of regression. Then, Neuman and Oaxaca (2002) decomposition method tookwage gap to four parts, and then calculated the corrected differentials of humancapital and ownership of discrimination in the proportion of the differentials. Finally,the decomposition results in2007compared with1995,2002, we analyzed changes in these three stages of public enterprises and private enterprises wage differentials, aswell as trends in human capital differences and differences in the proportion ofownership discrimination. The results show that, if not corrected dual sampleselection bias, the wage difference will be underestimated, the differentials in therevised decomposition, human capital differentials are dominating. Differential in theproportion of human capital is from17%in1995to63%in2007, showing that thelabor market reforms of the early results, but also that of public enterprises moreattractive to talent.After the regression and decomposition of the average wage, we further studied thequantile regression of public enterprises and private enterprises, and learned Machadoand Mata (2004) decomposition method and Melly (2005) decomposition methods forwage distribution of public enterprises and private enterprises. This paper learn thatthe wage gap for discrimination mainly exist in high-income workers. Wage gaps arebiggest in public and private enterprises for low-income workers mainly because ofhuman capital differentials. Visibly, reform of public enterprises should be concernedprimarily in high-income groups.