An Empirical Study On The Wage Difference Between Formal And Informal Employment In China

Since China’s reform and opening up,the planned economy has been gradually connected with the market economy.In the face of a large number of recessive unemployed people and rural surplus labor force rushing into cities and towns,the scale of informal employment has gradually expanded and become the main way of employment.Informal employment has played a strong role in alleviating the employment contradiction in China.However,with the rapid development of informal employment,problems have become increasingly prominent,such as the phenomenon of "different pay for the same work" in formal employment and informal employment,and some negative emotions caused by the income difference between them,which have a great impact on the effectiveness of the labor market and social stability。In addition,informal employment may have adverse effects on economic growth and social welfare,which are worthy of more careful study.Informal employment plays an important role in understanding the function of the labor market and the structure of economic activities.A large informal sector has an important impact on the efficiency of labor allocation.To understand income inequality,persistent poverty and low efficiency of labor market in developing countries,it is essential to master the nature,characteristics and functions of informal employment.Taking chip data as an example,this paper compares and analyzes the wage differences between formal and informal employment in China from the perspective of the nature of enterprises,private enterprises and state-owned enterprises.Under the ownership systems of private enterprises and state-owned enterprises,this paper makes OLS regression and quantile regression for the wage differences between formal and informal employees,and adopts Machado The method of constructing counterfactual wage distribution decomposition(MM method for short)proposed by et al.(2005)investigated the change of wage difference between formal and informal employees in different quantiles of wage distribution.Through analysis and comparison,it was found that the most influential factor was education.Although the return rate of formal employment education was higher than that of informal employment,the return rate of formal employment education in state-owned enterprises was higher But not as good as private enterprises.Although gender discrimination is widespread in formal and informal employment,it is more serious in formal employment.The wage gap between formal employment and informal employment in private enterprises is higher than that in state-owned enterprises,and there is more obvious employment discrimination.This paper is divided into five chapters,including the following specific contents:The first chapter is the introduction.This paper introduces the current situation and development of informal employment at home and abroad,and on this basis leads to the purpose and significance of this study.This paper summarizes and analyzes some research methods and contents of informal employment and gives the innovation of this paper.The second chapter is the concept of informal employment and related theories.This paper briefly introduces the concept of informal employment and the positive significance of developing informal employment for our country,and briefly expounds the classification of informal employment and the theory of wage determination.The third chapter is empirical analysis.First of all,the analysis method and model construction are briefly described,the wage decision equation is established,on the basis of which quantile regression and counterfactual decomposition are done.The next step is to explain the data source.This paper selects China household income According to the data of 2002,2007 and 2013 in projects(chip for short),urban residents were selected as the survey objects,and state-owned enterprises and private enterprises were screened out according to the types of work in the questionnaire,and formal employees and informal employees were screened out according to the nature of labor contracts to determine formal and informal employment.Then take the logarithm of hourly wage and make descriptive statistics for each explanatory variable.Then using quantile regression,the paper analyzes the main factors and the rate of return that affect the wage difference between formal and informal employment of state-owned enterprises and private enterprises,and observes the differences in different positions in the conditional distribution.Then using the method of Machado Mata quantile decomposition,this method is mainly based on the probability integral transformation theorem to establish the counterfactual wage distribution.Mm counterfactual decomposition can better analyze and study the factor characteristics of wage differences between the two employment modes.The fourth chapter is the main conclusions and policy recommendations.From the comparative analysis of wage differences between formal and informal employment of state-owned enterprises and private enterprises in this paper,we can see that there are great differences between formal and informal employment wages of state-owned enterprises and private enterprises,and narrowing the differences between them has a positive impact on the development of informal employment and the improvement of the labor market in China,and some suggestions and opinions are put forward.The innovation of this paper lies in the analysis of the differences in the whole wage distribution between formal employment and informal employment.Most of the domestic literature mainly studies the differences in the conditional mean value of the two employment modes,and there is less analysis of the wage differences from the perspective of the whole wage distribution.The influencing factors of wage difference will change with the range of wage distribution.For example,the wage return rate of personal endowment such as education level and work experience will vary with the whole wage distribution range.In this paper,quantile regression and mm counterfactual decomposition method are used to study and compare the wage differences of formal and informal employees in private enterprises and state-owned enterprises under two different management systems.What is different from the past is that instead of starting from the "average" rate of return of wage determination equation,we focus on the "distribution" of the rate of return,and compare the changes of wage differences between the two employment modes in different distribution positions The law of motion.