Labour market segmentation and urban-rural wage gap: the role of education

Jiarui Nan () and Gurleen Popli ()
Additional contact information
Jiarui Nan: School of Economics, University of Sheffield, Sheffield S10 2TU, UK
Gurleen Popli: School of Economics, University of Sheffield, Sheffield S10 2TU, UK

No 2025015, Working Papers from The University of Sheffield, Department of Economics

Abstract: This paper examines the determinants of the urban-rural wage gap in China within the framework of segmented labour markets. Using nationally representative data from the China Family Panel Studies (2014–2022), we employ Oaxaca–Blinder decomposition at the mean, and Recentered Influence Function (RIF) regression across the wage distribution. A key contribution of this study is the use of alternative definitions of urban and rural status, based on hukou registration and geographic residence, allowing us to capture both institutional and spatial dimensions of inequality. The results show that mean wage disparities are largely explained by compositional differences, particularly in education and access to formal contracts, reflecting segmentation between distinct rural and urban labour markets. Yet rural workers also experience significant lower returns to education. Quantile decompositions reveal that the wage gap widens at higher percentiles, where unobserved or institutional disadvantages become more pronounced, for both men and women. Overall, the findings demonstrate that China’s urban-rural wage inequality reflects both unequal endowments and structural segmentation. The definition of “urban” and “rural” critically shapes interpretation and policy implications.

Keywords: return to education; China; wage gap; regional differences; decomposition; recentered influence function; segmented labour markets (search for similar items in EconPapers)
JEL-codes: J24 J42 R23 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2025-12
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.sheffield.ac.uk/economics/research/serps First version, December 2025 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:shf:wpaper:2025015

Access Statistics for this paper

More papers in Working Papers from The University of Sheffield, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Mike Crabtree ( this e-mail address is bad, please contact ).