Comparison Of Characteristic Differences Between Informal Employment And Formal Employment In China

Before the policy of reform and opening-up, in the background of our highly centralized planned economy, informal employment phenomenon was extremely rare. But after this policy,the planned economy system transferred to the market economy step by step. Informal employment, such as family workshop and self-employment, occurred in China. At the same time,the way of employment in formal sector shifted from lifelong tenure to contract system. New employment forms like dispatching and part-time job created the necessary conditions for formal sector to absorb informal employment. With the scale of Chinese informal employment keeps growing, informal employment is beneficial to ease employment pressure and reduce labor cost in our country, but it also shows some defects like poor social security of workers. According to the2011 Chinese Health and Nutrition Survey data, from the perspective of the whole informal employment and different types of informal employment, this research compares the characteristic differences between informal employment and formal employment by binary logit model, nested logit model and mixed logit model. The results show that, between these two groups, there are differences in education, income, working time and so on. This research argues that upper-tier informal employment could change individual operation business to formal enterprises gradually.Lower-tier informal employment could grow into upper-tier informal employment by the way of self-employment. The formal sector should try to open the channel of absorbing informal employment as regular employees. In the meanwhile, the government should further narrow the education gap between rural and urban area, expand the coverage of the new rural cooperative medical insurance and fully play the complementary role of commercial insurance.