Wage Reforms in China During the 1990s

In urban areas of China, economic reforms were intensely implemented after 1984. We focus on two primary aspects of the reforms in the 1990s, those pertaining to the labor market and to wages. Based on original interviews and two unique household data sets, we investigate the effects of the reforms. Our first finding is that the components of annual income have changed, reflecting fewer subsidies and more diverse sources of income (such as self-employment), over the period from 1995 to 1999. By 1999, the wage structure reflects less seniority-based pay, allows for more discretion in rewarding non-productive characteristics (gender and Communist Party membership, for example) and also permits more productivity-related pay (as evidenced by increased returns to human capital).