Wage determination and occupational attainment in the rural industrial sector of China

The development of China's rural township, village, and private enterprises (TVP), in which real wages have gown at around 11% per annum over the past decade, is one of the most remarkable achievements of China's economic reform. This achievement has taken place despite relatively rigid control of labor mobility and job assignment by local authorities. Individual firms, however, have considerable influence over wage determination. This study applies human capital theory to explore the wage setting process in this sector. It is found that the impact of both labor market experience and education reflect labor productivity rather than sociopolitical rules of wage setting. The paper employs a legit model to investigate the links between education and occupational attainment The relationship between wages, education, and occupational attainment, for those who find jobs through their own efforts, is similar to that of western market economies. Although education does not affect wages of those assigned jobs it affects their occupational attainment. (C) 1995 Academic Press, Inc.