Wage differentials between urban residents and rural migrants in urban China during 2002-2007: a distributional analysis

This paper examines the wage differentials between urban workers and rural migrants in China's urban labor market. The wage differentials between the two groups are found to be higher at the top end than at the bottom part of the wage distribution in both 2002 and 2007. We decompose the distributional wage differentials between the two groups into a composition effect explained by differences in productivity characteristics, and a discrimination effect attributable to unequal returns to those characteristics. We find that the discrimination against migrant workers increases with the percentile of wage distribution in both 2002 and 2007. We also show that the discrimination against rural migrants has intensified during 2002-2007 throughout the wage distribution.