Differential Rewards to, and Contributions of, Education in Urban China's Segmented Labor Markets

Using worker data from a 1999-2000 urban enterprise survey, we examine the effects of education on the current earnings of continuously employed urban workers, migrants and laid off but subsequently re-employed workers. We also decompose the earnings differentials between each of these groups of workers and then assess the contribution of education to explanations of the differentials. The empirical results demonstrate that returns to education increase with marketization and competition in the workplace. We also find educational attainment to be an important explanator of the earnings differentials between institutionally differentiated groups of workers in China's urban labor markets. Copyright 2004 Blackwell Publishing Ltd