Industry Segmentation And Income Inequality In Market Transition

The perception of income inequalities was always one of the hot topics in social stratification research. Reform and opening up more than30years, China has experienced the most important social changes, market transition. With the rapid growth of economy, income gap in China is widening, and institutional and structural factors are the root causes leading to income inequality. This research, starting from the important structural factor of industry, making market transition theory and labor market segmentation theory as the theoretical basis, and "segmentation" logic of structuralism as basic point, inspects industry income inequality in the background of market transition, aims to discourse the effect of industry segmentation structure to income inequality and its formation mechanism.Due to the system researches of industry segmentation are still relatively rare, nor a clear definition and classification of the industry segmentation, therefore, this research first defines the industry segmentation, and according to the different fields and mechanisms of functions, we classifies industry segmentation into three categories, namely, the industry’s institutional segmentation, industry’s regional segmentation and industry’s segmentation of primary labor market and secondary labor market, on this basis, we discuss the different classifications of industry segmentation and income inequality in depth. Based on theory of market transition and labor market, this research proposes eight basic hypotheses about industry segmentation and income inequality. Using the data from the Chinese General Social Survey in2006(CGSS2006) and China Statistical Yearbook, through computing the Gini coefficient and Theil index about industry income inequality, and combining with using the statistical analysis tools such as Ordinary Least Squares Models and Logistical Regression Models, the hypotheses have been tested.The results find that:(1) the income gap between China’s industry expanded rapidly, from2003to2009, the industry Gini coefficient continue to expand from0.116to0.137. Regional inter-industry income disparities are significant, the region of highest average wage of industry workers is the eastern region, followed by western region, and the lowest is central region.(2) The income gap between the state sectors and non-state sectors of industries is no longer significant. However, the income inequality between monopoly industries and non-monopoly industries is very prominent, and polarization of industry income is serious. Institutional path dependence is an important factor in the industry institutional segmentation.(3) The differentiation between industry primary labor market and industry secondary labor market is significantly, compared with industry secondary labor market, industry primary labor market has the characteristics that high wage, high bonuses, high welfare and high stability. Thus, there are significant segmentation effects between inter-industries, and there exactly exist segmentation of primary labor market and secondary labor market inter-industry. This point support and test the dual labor market segmentation theory.(4) On the terms of the income disparities of occupational class in industry, the results did not show that the higher occupational class has higher income. This point is not entirely consistent with the internal employment mode of labor market segmentation theory. The results of the research for wage promotional mechanisms, work environment differences, the income return of the length of service in present job between industries are match with labor market segmentation theory, namely, on the wage promotional mechanisms, work environment and the income return of the length of service in present job, the industry primary labor market is superior to the industry secondary labor market. On the return to human capital (education and technical titles), industry primary labor market is higher than industry secondary labor market, however on the return to political capital (party membership), there are no significant differences between industry primary labor market and industry secondary labor market.(5) About the judgment of industry income rationality, shows the characteristics of "bipolar division", namely, in different industries, there are similar proportion between judgment of "income is reasonable" and the judgment of "income is unreasonable". Analysis shows that industry and income have certain effect on the judgment for income rationality, but the effect of income level is more significant. The results reveal that the difference of the different judgment about income rationality for industry workers does not come from inter-industry comparison, but from "partial comparison" within industry. In other words, the judgment about income rationality comes from the sense of relative deprivation which brings about partial comparison with similar group. Therefore, the judgment of income rationality for different industries workers come from the comparison with counterparts. Thus, compare with counterparts, the high-income workers tend to consider that their income is reasonable and fair, while the opposite considers to be unreasonable and unfair.(6) The awareness of income inequity for industry workers shows "double feature" in market transition. Under the interaction of market and non-market mechanisms, the attribution cognitive of income inequality shows the situation that internal attributions and external attributions coexist. On one hand, under the impact and penetration of market-oriented distribution logic, there is growing acceptance and recognition that education as core of human capital factor play important role in income distribution; on the other hand, people generally agree that structural factors such as policy have important effect on income distribution. Overall, current industry income inequity is still within people’s rang of "tolerance", though the excessively high income of monopoly industry has caused social resentment, that still has not shaken the fair cognition to the overall industry income distribution.This research analysis the multi-segmentation structure of industry and income inequity in depth, continue and expand the Dual Labor Market Theory, and rich China’s research experience about labor market segmentation in this theoretical framework.