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Keywords:

  • formal employment;
  • informal employment;
  • income differentials;
  • Chinese labour market

Abstract

This study estimates the formal–informal as well as the formal and informal male–female employment hourly income differentials in urban China. The results indicate that differences between the characteristics of formal and informal employment account for a much higher percentage of the hourly income differential than does discrimination in the labour market. In addition, we found that ignoring the sample selection bias results in the overestimation of the formal and informal male–female hourly income differential and the degree of discrimination against informal employment of women and conversely, the underestimation of the degree of discrimination against formal employment of women. Copyright © 2011 John Wiley & Sons, Ltd.