The Impact Of Urbanization On The Labor Skill Wage Gap

With the successful completion of the goals of the 13 th Five-Year Plan,China’s economic and social development has reached a new level,and residents’ income has grown steadily.But at the same time,the inequality in income distribution has shown an expanding trend,with the Gini coefficient rising from 0.462 in 2015 to 0.568 in 2020.The main source of income for Chinese residents is wage income,and wage gap is an important part of the income gap.Some studies have found that the main reason for the rise in wage inequality is the widening wage gap between the high-skilled and low-skilled workers.Therefore,exploring the influencing factors of skill wage gap is of great significance to the stable development of economy and society.First,through the analysis of relevant literature,this paper explores the mechanism of urbanization on the labor skill wage gap.The development of urbanization brings the spillover effect of technology and knowledge through the micro-mechanism of sharing,matching and learning,which increases the wage income of laborers with different skill levels.Moreover,urbanization has significant economies of scale and agglomeration effects,which help to promote technological innovation and industrial structure upgrading,further increase the demand for labor skills,and widen the skill wage gap between laborers.Secondly,this paper uses the 2019 China Statistical Yearbook and other relevant data,selects10 indicators from the economic and population dimensions to construct an urbanization evaluation index system,and uses the entropy method to calculate the urbanization level score of each province.Combined with the 2020 China Family Panel Studies(CFPS)data,this paper analyzes the impact of urbanization on the skills wage gap through an extended wage equation.The results of the study show that the development of urbanization promotes a significant increase in the average wage level of the labor force,and the high-skilled labor force obtains a higher wage premium from it,and urbanization widens the skill wage gap between labor forces.The expanding effect of urbanization on the skill wage gap is more evident in the non-state sector,indicating that the economies of scale and knowledge spillovers of urbanization will benefit the highly skilled labor force in the non-state-owned sector more,which promotes non-state-owned enterprises have the further development in areas with a high level of urbanization.Finally,in order to examine the changing trend of the skill wage gap of labor in different quantiles of the wage distribution,this paper conducts quantile regression analysis on high-skilled labor and low-skilled labor respectively,and decomposes the skill wage gap through RIF regression decomposition method.The results of the study show that urbanization has an increasing effect on the wage income of both high-skilled labor and low-skilled labor at each quantile,and the overall development of urbanization has widened the wage gap of labor skills.The improvement of the level of urbanization in the region can more attract the employment of high-skilled laborers.With the development of urbanization,the skill wage gap between the middle-wage groups has further expanded,while the skill-wage gap between the highest-wage group and the lowest-wage group has declined.Among them,economic urbanization has a greater effect on raising the wages of high-skilled laborers,and population urbanization has a greater effect on raising the wages of low-skilled laborers of low-wage groups.Population urbanization will narrow the skill wage gap of low-wage groups,and both economic urbanization and population urbanization will increase the skill-wage gap of high-wage groups,but their contribution to the skill-wage gap of the highest-wage groups will drop significantly.Therefore,the development of population urbanization is more conducive to the low-skilled labor force through learning to accumulate human capital to raise the wage level and reduce the skill wage gap,and this effect is more obvious in the low-wage group.At the same time,increasing investment in education,improving the quality of the population,allowing more people to reach higher income levels and enjoy the wage spillover effect brought about by the development of regional urbanization will help further narrow the skill wage gap.The conclusions of this paper not only help us deepen our understanding of wage gaps,but also help in the design and evaluation of urbanization policies in government departments.