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Earnings Premium in State Jobs Across Urban China

Author

Listed:
  • Yuanyuan Ma

    (Wenlan School of Business Zhongnan University of Economics and Law)

  • Patrick Paul Walsh

    (Centre for Sustainable Development Studies School of Politics and International Relations University College Dublin)

  • Liming Wang

    (School of Economics and Management Beijing University of Technology and Irish Institute for Chinese Studies University College Dublin)

Abstract

Using the Chinese Household Income Project (CHIP) data, we find a 30 percent raw differential in earnings in favor of state workers in 2002. We examine the degree to which this differential is a pure premium by using a Heckman two-step selection model, where we instrument workers’ preference for state jobs with family political connections, among other factors. We find that 22 percent of the observed earnings differential is a pure premium to a worker in a state job in urban China. In the absence of a political transition in China, state jobs remained the privileged constituency in a dual-track transition that attracted the best politically connected workers in urban China and offered them a pure earnings premium.

Suggested Citation

  • Yuanyuan Ma & Patrick Paul Walsh & Liming Wang, 2017. "Earnings Premium in State Jobs Across Urban China," Asian Economic Papers, MIT Press, vol. 16(2), pages 167-184, Summer.
    • Handle: RePEc:tpr:asiaec:v:16:y:2017:i:2:p:167-184
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    References listed on IDEAS

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    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • G00 - Financial Economics - - General - - - General

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