A cohort analysis of wage structure and participation during economic transition in urban China.

摘要

The last twenty years have witnessed an economic transition for many countries, including the former Soviet Union, Central and Eastern Europe, as well as China. Different from other countries, China has been experiencing a gradual and partial economic transition since the late 1970s. The consequences of the economic transition in all these countries are also quite different. Other transitional economies have recorded abrupt recessions, as reflected in negative GDP growth, a decline in wage, and an increase in unemployment. As a stark contrast, China has experienced a smooth and rapid economic growth in the last two and a half decades of economic transition. Its GDP growth has kept on a leading level with that of the whole world. Besides, the wage level, as well as wage inequality, has risen substantially.; This thesis conducts research on wage structure and labor force participation during economic transition in urban China. One major contribution of this thesis is to separate the cohort effect from the age effect in analyzing labor market behavior in economic transition. Given the dramatic changes to the Chinese economy and society in the past half century, cohort quality, cohort size, cohort preference, and even labor market opportunities for each cohort will be very different. Therefore, inter-cohort differentials in labor market behaviors may be quite significant. However, previous studies usually employed cross-section analysis, and have ignored the cohort effect, which mixed up cohort effect and age effect and might cause the serious problem of bias in estimation. Our analysis avoids this problem.; One purpose of the thesis is to find the role of the cohort effect in changes in the wage structure of urban China. We construct synthetic cohort data from the repeated cross-sections of Urban Household Survey (UHS) 1988-2002, and get a series of interesting results on wages. Our analysis is not only the first study in cohort patterns of wage structure in economic transition, but also the first study that systematically discusses the winners and losers during economic transition in urban China. Besides, our study makes contributions in the further discussion of factors influencing cohort effect. Furthermore, the thesis provides the first study in the role of cohort effect in estimating returns to education and age premium. Lastly, this thesis decomposes factors affecting the growth of wage and wage inequality, and finds that the cohort effect is mainly responsible for the rapid wage growth and inequality increase in urban China.; The other purpose of this thesis is to find the role of the cohort effect in the dramatically declining labor force participation of urban China. Our study reveals that the cohort effect explains much of the decline in the labor force participation. This is the first study in analyzing labor participation in economic transition using synthetic cohort data, and we find that estimation of cross-section analysis of life-cycle participation is quite misleading. Besides, our study presents the first analysis of the wage structure effect on participation after separating the cohort effect from the age effect. Will higher inequality cause incentive effect or disincentive effect? Will results differ for men and women? This thesis provides a thorough analysis, and makes important contributions to the literature.