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Skill Formation, Employment Discrimination, and Wage Inequality: Evidence from the People’s Republic of China

Author

Listed:
  • Wang, Jun

    (Asian Development Bank Institute)

  • Liao, Chengjuan

    (Asian Development Bank Institute)

  • Wan, Xuan

    (Asian Development Bank Institute)

  • Song, Hui

    (Asian Development Bank Institute)

Abstract

We study the impact of skill formation on employment opportunities and wages. Instead of international trade theory or technological progress theory, we focus on labor “skill formation” to investigate the employment discrimination and skill wage inequality in the PRC's labor market. Based on data from the 2014 China Family Panel Studies, we use cognitive ability and noncognitive ability to measure skill formation. The empirical results show that skill formation has a positive impact on employment opportunities and wages. This result exhibits robustness in tests on monopoly industries and non-monopoly industries, except that there is a certain tendency toward wage equalization in monopoly industries. We also find employment discrimination resulting from skill differences in state-owned and non-state-owned sectors. A similar trend of wage equalization exists in state-owned sectors, while a significant trend of wage differentiation exists between high and low skills in non-state-owned sectors.

Suggested Citation

  • Wang, Jun & Liao, Chengjuan & Wan, Xuan & Song, Hui, 2021. "Skill Formation, Employment Discrimination, and Wage Inequality: Evidence from the People’s Republic of China," ADBI Working Papers 1283, Asian Development Bank Institute.
    • Handle: RePEc:ris:adbiwp:1283
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    References listed on IDEAS

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    More about this item

    Keywords

    skill formation; employment discrimination; skill wage inequality;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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