Is the Wage of Regular Employees Higher? A Study on the Difference and Evolution of Establishment Wages in China’s Public Sectors

Abstract

The “dual system” employment is an important feature of China’s public sector personnel management. This article uses the data from the 2011, 2013 and 2015 China Household Finance Survey to investigate the wage difference and its evolutionary trend caused by the dual system. The results show that there is a significant gap between the wages of regular employees and contracted employees, and the wage of regular employees is significantly higher than that of contracted employees. From 2011 to 2015, public sectors’ establishment wage gap was significant, and the wage gap caused by the endowment difference was greater than the wage gap caused by the characteristic difference; over time, the proportion of wage gap caused by the characteristic difference in the total gap increased slightly, indicating discrimination in the establishment of public sectors in China is on the increase. Work experience is the most critical factor that causes establishment wage differences in public sectors. This may be because establishment work is not only stable but also pays attention to qualifications, which shows work experience advantages; while high mobility makes it difficult for contracted employees to form work experience advantages. Years of education and political status have increasingly become important factors affecting establishment wage differences in public sectors.There is heterogeneity in establishment wage differences in public sectors, which is manifested that the establishment wage difference of low-wage personnel is greater than that of high-wage personnel; in 2011, the wage gap caused by discrimination was the most serious in the low-end groups of wage distribution, and the wage difference among high-end groups are mainly caused by the difference in endowments; by 2015, discrimination is no longer the cause of wage gaps in the low-end groups of wage distribution, and the wage difference among low-end groups are mainly caused by the difference in endowments. By comparing the establishment wage difference between government departments and public institutions, it is found that compared with public institutions, government departments have a more serious wage difference; in government departments, the wage gap caused by the difference in characteristic is greater than the wage gap caused by the difference in endowments. This shows that government departments have serious wage discrimination against contracted employees; for public institutions, the wage gap caused by the difference in characteristic is smaller than the wage gap caused by the difference in endowments, which indicates that the wage difference in public institutions is more dependent on personal endowments.For a long time, China has been facing the problem of income inequality, which is often manifested as wage inequality, and there is serious wage inequality caused by establishment in China’s public sectors. Improving the management mode of the establishment of local administrative and public institutions will not only help to improve the operational efficiency of administrative and public institutions, but also help to reduce the income inequality of residents in China.