Research on the Wage Gap Between Urban and Rural Labor: Based on CHNS Micro Survey Data

In recent years, there is a substantial debate on the wage differences in China. Yet most empirical studies of wage gap concentrate only on short-run changes due to the lack of high-quality data. In this paper, we study the wage gap between urban and rural labor in China using the Chinese Health and Nutrition Survey (CHNS) data spanning several years. By the methods of OLS regression and Oaxaca decomposition we have two main findings: first, the wage gap resulting from household register discrimination have been gradually decreasing since the Lewis transition, and the growth rate of migrant workers' wages obviously exceeded the accumulation rate of their human capital in 2011; second, the wage disadvantage of the rural labor mainly comes from the weakness of its human capital, compared with that of the urban labor. These findings would remind us of the rising welfare inequality problem in China against the background that the accumulation of human capital on rural labor have slowed down after the Lewis transition. In the end, we come up with several suggestions for policy reform. First of all, the central government should distribute more educational resources into rural areas specifically. In addition, the local government and enterprises should increase specific investment in skills training for migrant workers. Last but not least, the governments ought to gradually abolish the related rules that restrain migrant workers from obtaining urban public services, which will help to equalize the social welfare in China eventually.