Market Transition and the Firm: Institutional Change and Income Inequality in Urban China
研究中国城市市场化如何通过企业用工实践改变收入分配，发现私有企业的高边际生产率、劳动力市场竞争和基于绩效的奖励机制是收入不平等加剧的关键原因。
This paper examines how the rise of a market economy in urban China redefines the rules governing economic activities and affects on earnings inequality. We identify three causal mechanisms linked to institutional change that are transforming the firm's employment practices: the higher marginal productivity of a private enterprise economy relative to state-owned enterprises, competition by firms for skilled and semi-skilled labor following emergence of labor markets and the end of state monopoly on labor allocation, and increased emphasis on merit-based reward systems in firms. Analyses of survey data from urban China show how these three causal mechanisms stemming from the transition to a market economy contribute to new patterns of earnings differentiation that increase income returns to human capital and private-sector entrepreneurship.