Wage Determination in Rural and Urban China: A Comparison of Public and Private Industrial Sectors

Burgeoning industry in rural China in the last decade is playing an increasingly important role in the country's economy and promises a new economic organization and social structure. I compare the wage determination process for employees in the rural public sector, rural private sector, and the urban state sector. Data are from two sample surveys conducted in China in 1986. Multisample structural equation analysis shows that wage determination in rural industry is similarfor both public and private enterprises, but differs from wage stratification in the urban state sector. The findings suggest that rural industrialization in China does not simply replicate urban industrialization. Property-rights theorists may have overemphasized the relationship between types of property ownership and the behavior of firms, including the wage determination process.