A Study of Determination in Chinese Peasant Workers’ Wage: The Role of Human Capital and Market Segmentation

Abstract

The result of OLS estimation indicates that peasant workers’ wage will increase by about 6.1% when education increases 1 year, and the wage increase of those who experienced professional training is about 15.7% more than those who not. After controlling other variables, industry monopoly not only brings minority’s prosperity but also majority’s poverty. Both human capital effect and labor market segmentation effect are enhanced obviously by Chinese marketization process. The conclusions imply that strengthening education and training and eliminating labor market segmentation will be very important policy to improve peasant workers’ wage. This paper also finds that none of the years of parental schooling, the numbers of brothers and sisters and the types of investigated area is an ideal IV when dealing with endogenous educational issues.