A Study On Income Differentials And Its Influencing Factors Berween Formal And Informal Employment

After the reform and opening up, along with the reform of economic system and the adjustment of employment structure, informal employment in our country has been rapidly developed. At present, informal employment has become an important form of employment in cities and towns in our country. Informal employment can not only absorb a large number of labors, but also meet the demand of the diversity of urban life. What’s more, it resolves the current employment pressure and promotes the development of urbanization. But compared with formal employment, informal employment is a low employment form, and has low wages. Its work is not stable and often lack of social insurance coverage. With the informal employment’s scale expanded year by year, the wage income differentials between formal employment and informal employment in our country has also showed an expanded trend. Relations with social stability and income gap for formal employment in the informal employment income disparity, you need to study on the influencing factors of the income disparity.This paper, taking the formal employees and informal workers in towns as the research object, using the CHNS survey data from2000to2009, and combined the method of theoretical analysis and empirical analysis, respectively from the perspective of demographic characteristics and the perspective of income distribution, makes a study on the income differentials and influencing factors between formal and informal employment.Chapter One starts with an introduction of the background, purpose, the thinking and framework of this study, etc. Through the literature summary of the study on income differentials between formal employment and informal employment, it concludes the innovation and deficiency of this article.Chapter Two is about the literature review of research related to informal employment. Firstly, it introduces the definition about the concept of informal employment made by domestic and foreign scholars or organization. Then it generalizes the theory of informal employment both at home and abroad, and summarizes the causes of informal employment in our country. Finally, it lists the previous analysis methods about the influence factors of income disparity.The third chapter introduces the statistical definition and basic classification of formal employment and informal employment in our country, and summarizes the factors influencing the income disparities of formal employment and informal employment based on wage determinism.The fourth chapter, on one hand, based on the perspective of demographic characteristics, inspects urban formal employment and informal employment’s salary difference. On the other hand, based on the perspective of income distribution, inspects urban formal employment and informal employment’s salary difference which is in high, medium and low wage distribution.The fifth chapter respectively uses the wage equation and quantile regression, to analyzing formal employment and informal employment wage structure. It also uses improved Oaxaca-Blinder decomposition method to decomposing urban formal employment and informal employment mean wage differentials, and finds out the main influence factors and its contribution.The sixth chapter gives the conclusion of the front analysis, thinks that income differentials between formal employment and informal employment is mainly caused by the spectrum differentials of salary distribution. Among the many influencing factors, education, working experience are the most important influencing factors. By decomposed the income disparity, the two employments’ wage gap is mainly caused by discrimination. Its contribution is53.07%. Finally, based on the above analysis conclusion, it gives the corresponding policy recommendations, in order to build a harmonious socialist society and have a positive impact for realizing China’s dream.