Inequality In Employment Rights And The Income Gap Between Urban And Rural Laborers

In the past thirty years, labor market reform played a key role in the economic development and the structural transformation of dual economy in China. But the income distribution has not been improved, and the urban-rural income gap expands especially. In this paper, it is considered as the result of urban-rural inequality in employment rights, which is an ignored problem in China' labor market reform.Several research methods are applied in this paper, including historical and logical methods, theoretical and practical analysis, normative and positive analysis. The main purpose is to investigate the effects of the inequal rights in employment opportunities, wage gains and welfare benefits on income differences between urban and rural laborers in the non-farming sectors. Firstly, the historical evolution and current situation of the urban-rural inequality in employment rights are introduced. Secondly, based on the result of employment choice, the influences of the rights in wage gains and welfare benefits on urban-rural income gap are analysed. Then, the switching regression model is used to explore the process of employment choice, and to test whether or not human capital and institutional factors restrict employment opportunities among laborers. And then, the differences in employment opportunities between urban and rural laborers can be observed. Lastly, based on Appleton decomposition results, the influences of employment choice on urban-rural wage differences are examined.The following conclusions are obtained:1) The social security and welfare system in China did not realize the regulation of income distribution, and made it worse instead. 2) Wage gains and welfare benefits were the most important factors which led to income differences, so the inequality in wage gains and welfare benefits enlarged the income gap between urban and rural laborers directly. 3) For the non-farming rural laborers, especially the migrant rural workers, their employment opportunities and wage gains were limited due to the lower level of human capital.4) Regarding to the urban-rural differences in employment opportunities and wage gains, hukou status made a visible impact on the non-farming rural laborers, but had little impact on the migrant rural workers. These conclusions are helpful to the promotion of equal employment, to the construction of uniform labor market and to the realization of consistent economic growth and harmonious social development.The main contributions of this paper are:1) A realistic problem ignored during China' labor market reform is discussed, and the positive analysis on the relationship between employment rights and urban-rural income gap is conducted. 2) A detailed and allsided investigation on the differences in employment and income between urban and rural laborers is carried out. For instance, the unequal welfare benefits are estimated, the different chances for urban and rural laborers to be employed in different occupational areas/ownership-type units/industries are compared, and the different employment opportunities within the same occupational area/ownership-type unit/industry are distinguished. 3) Some more reasonable methods are applied to improve the present researches. For example, the contribution of each factor to income inequality is further decomposed into its between-groups and within-group contributions, the switching regression model is used to avoid the truncation bias and sample selection problem, and Appleton decomposition method is applied to solve the index number problem and selection bias problem. So the results received by this paper may be more objective and reasonable.