Abstract
The present paper estimates earnings differentials between state and non‐state sectors for Chinese urban residents in 1996 by taking into account differences in non‐wage benefits. Household survey data are used to estimate wage differentials while aggregate statistics are utilised in estimating non‐wage benefits. We find that state‐sector workers earned significantly more than workers in urban collective and domestic private enterprises in 1996. Unskilled workers in foreign invested enterprises (FIE) earned significantly less than those in the state sector but skilled workers earned more in FIE than in the state sector. These findings shed light on the source of labour immobility that state‐owned enterprise had experienced until recently.
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