Wage premium, functioning labor markets, and the role of education: Evidence from rural China

This paper assess the China s rural labor market by exploring the role of education playing in the wage premium among different job location by using samples covering more than 2000 households in 100 villages which are nationally representative. The results indicate that the rural labor markets are functioning and reflect as follows: (i) Whether the definitions of migration are, there are obvious wage premiums of migrants and with the boundary that we defined gradually away from the home township of rural labor, the wage premium becomes more obviously. At the same time, we find the return to education of migrants is significantly higher than those work locally. (ii) Compared to the labor force employed in his/her township, those who worked in other job locations all have a significant wage premium when we have a more comprehensive division after considering the employment distance and cost of living. (iii) Only work in the big cities has a consistent significantly higher return to education than work within labor s home township. Acknowledgement : Funding: This work was supported by the National Natural Science Foundation of China [grant number 71333012]