Hukou system reforms and skilled-unskilled wage inequality in China

Jiancai Pi and Pengqing Zhang

China Economic Review, 2016, vol. 41, issue C, 90-103

Abstract: In China, rural migrant workers usually cannot get fair treatment due to the hukou system. This paper investigates how hukou system reforms affect the skilled-unskilled wage inequality through the general equilibrium approach. In the basic model, we find that an increase in the strength of hukou system reforms will narrow down the wage inequality if the urban skilled sector is more capital intensive than the urban unskilled sector. In addition, we separately extend the basic model by introducing the endogenous minimum wage and an informal sector, and find that in these two extended cases the main results of the basic model will conditionally or unconditionally hold. When we consider some empirical evidences in China, our models predict that an increase in the strength of hukou system reforms will reduce the wage inequality.

Keywords: Rural migrant workers; Wage inequality; General equilibrium approach; Urban unemployment; Informal sector (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (26)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:41:y:2016:i:c:p:90-103

DOI: 10.1016/j.chieco.2016.08.009

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