Skill Formation, Employment Discrimination, and Wage Inequality: Evidence from the People’s Republic of China

Jun Wang, Chengjuan Liao, Xuan Wan and Hui Song
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Jun Wang: Asian Development Bank Institute
Chengjuan Liao: Asian Development Bank Institute
Xuan Wan: Asian Development Bank Institute
Hui Song: Asian Development Bank Institute

No 1283, ADBI Working Papers from Asian Development Bank Institute

Abstract: We study the impact of skill formation on employment opportunities and wages. Instead of international trade theory or technological progress theory, we focus on labor “skill formation” to investigate the employment discrimination and skill wage inequality in the PRC's labor market. Based on data from the 2014 China Family Panel Studies, we use cognitive ability and noncognitive ability to measure skill formation. The empirical results show that skill formation has a positive impact on employment opportunities and wages. This result exhibits robustness in tests on monopoly industries and non-monopoly industries, except that there is a certain tendency toward wage equalization in monopoly industries. We also find employment discrimination resulting from skill differences in state-owned and non-state-owned sectors. A similar trend of wage equalization exists in state-owned sectors, while a significant trend of wage differentiation exists between high and low skills in non-state-owned sectors.

Keywords: skill formation; employment discrimination; skill wage inequality (search for similar items in EconPapers)
JEL-codes: J21 J24 J71 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2021-08
New Economics Papers: this item is included in nep-cna, nep-tid and nep-tra
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