The non-parametric analysis of wage distortion based on ability in the Chinese labour market

Qiao Wang

Applied Economics, 2021, vol. 53, issue 15, 1694-1715

Abstract: This study analyzes wage distortion based on ability in the Chinese labour market using a non-parametric approach. We first propose a signalling model by adding regressive wage incentives to describe the non-competitive Chinese labour market. Then, we show that the model primitives are non-parametrically identified and estimable using recently proposed measurement-error methodologies. Using a dataset from the China Health and Nutrition Survey, we provide empirical evidence that wages are mainly lower for a large number of workers compared with their ability levels, especially for female workers with medium ability levels.

Date: 2021
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DOI: 10.1080/00036846.2020.1841883

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