Labor Market Developments in China: A Neoclassical View

This paper assesses the applicability of two alternative theories in understanding labor market developments in China: the classical view featuring a Lewis turning point in wage growth versus a neoclassical framework emphasizing rational choices of individuals and equilibrating forces of the market. Empirical evidence based on multiple data sources fails to validate the arrival of the Lewis turning point in China, showing continuous and coordinated wage growth across rural and urban sectors instead. Consistent with the neoclassical view, we find that rural workers expanded off-farm work when mobility restrictions were lifted, interprovincial migration responded to expected earnings and local employment conditions, and returns to education converged gradually to the international standard. These findings suggest major progresses in the integration of labor markets in China.labor markets, rural-urban migration, wage growth, schooling returns, Lewis turning point, China

Labor market developments in China: A neoclassical view

This paper assesses the applicability of two alternative theories in understanding labor market developments in China: the classical view featuring a Lewis turning point in wage growth versus a neoclassical framework emphasizing rational choices of individuals and equilibrating forces of the market. Empirical evidence based on multiple data sources fails to validate the arrival of the Lewis turning point in China, showing continuous and coordinated wage growth across rural and urban sectors instead. Consistent with the neoclassical view, we find that rural workers expanded off-farm work when mobility restrictions were lifted, interprovincial migration responded to expected earnings and local employment conditions, and returns to education converged gradually to the international standard. These findings suggest major progresses in the integration of labor markets in China

Changes in China's wage structure

Using a national sample of Urban Household Surveys, we document several profound changes in China's wage structure during a period of rapid economic growth. Between 1992 and 2007, the average real wage increased by 202 percent, accompanied by a sharp rise in wage inequality. Decomposition analysis reveals 80 percent of this wage growth to be attributable to higher pay for basic labor, rising returns to human capital, and increases in the state-sector wage premium. Employing an aggregate production function framework, we account for the sources of wage growth and wage inequality in the face of globalization and economic transition. We find capital accumulation, skill-biased technological change, and export expansion to be the major forces behind the evolving wage structure in China

Population policies, demographic structural changes, and the Chinese household saving puzzle

Using combined data from population censuses and Urban Household Surveys, we study the effects of demographic structural changes on the rise in household saving in China. Variations in fines across provinces on unauthorized births under the one-child policy and in cohort-specific fertility influenced by the implementation of population control policies are exploited to facilitate identification. We find evidence that older households with a reduced number of adult children save more because of old-age security concerns, middle-aged households experience an increase in saving due to the lighter burden of dependent children, and younger households save more because of having fewer siblings to share the responsibility of parental care. These findings lend support to a simple economic model in which the effects of population control policies are investigated in the context of household saving decisions in China

Testing for Asymmetric Employer Learning and Statistical Discrimination

We test the implications of a statistical discrimination model with asymmetric learning. Firms receive signals of productivity over time and may use race to infer worker's productivity. Incumbent employers have more information about workers productivity than outside employers. Using data from the NLSY79, we find evidence of asymmetric learning. In addition, employers statistically discriminate against non-college educated black workers at time of hiring. We also find that employers directly observe most of the productivity of college graduates at hiring, and learn very little over time about these workers

The Quiet Revolution and the Family: Gender Composition of Tertiary Education and Early Fertility Patterns

It is well known that highly 'female' fields of study in tertiary education are characterized by higher fertility. However, existing work does not disentangle the selection-causality nexus. We use variation in gender composition of fields of study implied by the recent expansion of tertiary education in 19 European countries and a difference-in-differences research design, to show that the share of women on study peer groups affects early fertility levels only little. Early fertility by endogamous couples, i.e., by tertiary graduates from the same field of study, declines for women and increases for men with the share of women in the group, but non-endogamous fertility almost fully compensates for these effects, consistent with higher early fertility in highly 'female' fields of study being driven by selection of family-oriented students into these fields. We also show that the EU-wide level of gender segregation across fields of study has not changed since 2000

Job and wage mobility in a search model with non-compliance (exemptions) with the minimum wage

We use a simple job search model to explain the doubling of mean hourly earnings of white males, and the five-fold increase in their variance, during the first 18 years of labor market experience. For this purpose we embody minimum wage regulations and imperfect compliance in a job search model encompassing job mobility and on-the-job wage growth as potential sources of wage dynamics. The model is estimated by simulated GMM using data from the NLSY79. Our estimated model provides a good fit for the observed levels and trends of the main job and wage mobility data, and in particular it replicates very well the increase in the first and second moments of the wage distribution over the life cycle, as well as the fall in the fraction of workers paid below the minimum wage. Our estimates imply that job mobility explains between one third and one half of the observed wage growth. Counterfactual experiments of increases in the minimum wage and/or compliance deliver small effects on both the actual wage distribution and the nonemployment rate