Rural–Urban Migration in China and Indonesia
Edited by Xin Meng, Chris Manning, Li Shi and Tadjuddin Nur Effendi
Chapter 4: Wage Structures and Inequality Among Local and Migrant Workers in Urban China
Deng Quheng and Li Shi
4 Wage Structures and Inequality among Local and Migrant Workers in Urban China Deng Quheng and Li Shi 1 INTRODUCTION China has been in transition from a planned to a market economy since the end of the 1970s when economic reform began. Although the labour market has been slower to change than other markets, such as commodity and capital markets, there can be no doubt that a labour market has gradually developed. Currently, the labour market plays an important role in labour allocation and wage determination. Governments, both central and local, are no longer responsible for assigning jobs to workers, and enterprises now possess complete autonomy over hiring, firing and wage determination. Governments may still have control over the quantity of labour hired by state-owned enterprises and the public sector, but not over who to hire and at what price. Nevertheless, China's labour market is still far from competitive, and institutional barriers, both formal and informal, continue to exist. One of those barriers is the restrictions on rural migrants in the urban labour market implemented through the household registration (hukou) system. Under this system, only individuals who hold an urban hukou are eligible to obtain certain types of jobs in urban areas. This has led to a concentration of urban hukou holders in the professional and managerial sections of the workforce. In 1995, for instance, Meng and Zhang (2001) found that 36.7 per cent of urban hukou holders in Shanghai held white-collar jobs, whereas the proportion for rural migrant workers...
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