Working paper abstract

#2016-069

Glass ceiling effect in urban China: Wage inequality of rural-urban migrants during 2002-2007

Zhaopeng Qu & Zhong Zhao

The paper studies the levels and changes in wage inequality among Chinese rural-urban migrants during 2002-2007. Using data from two waves of national household surveys, we find that wage inequality among migrants decreased significantly between 2002 and 2007. Our analysis on the wage distribution further shows that the high-wage migrants experienced slower wage growth than middle-and low-wage migrants - a primary cause of declining inequality of migrants. By using distributional decomposition methods based on quantile regression, we find that the overall between-group effect dominates in the whole wage distribution, which means that the change in returns to the characteristics (education, experience and other employment characteristics) plays a key role, but on the upper tails of the wage distribution, the within-group effect (residual effect) dominates, implying that the unobservable factors or institutional barriers do not favour the migrants at the top tail of the wage distribution. We also study wage differential between migrants and urban natives, and find that though the wage gap is narrowed, the gap at the upper wage distribution is becoming bigger. Overall, the results suggest that there exists a strong "glass ceiling" for migrants in the urban labour market.

Keywords: rural to urban migrants, wage inequality, quantile decomposition, China

JEL Classification: J30, J45, J61