Anatomy of the Wage Gap between Local and Migrant Workers in Urban China : New Evidence from Matched Data

This paper examines the wage differentials between local and migrant workers in the local labor markets of urban China by using unique data that survey both migrants and local residents from the same community. The results suggest that the wage differentials between the two groups can be explained entirely by differences in personal characteristics, particularly education and current job experience. An examination of labor market segmentation in occupation, industry, and ownership of work unit indicates that within-group differences are more remarkable than across-group differences, while both can be explained mostly by observable characteristics. The wage differential is driven primarily by high-wage workers. Results from quantile decomposition confirm that the distributional heterogeneity in wage differentials is attributed mostly to a large gap in education and current job experience among high-wage workers