WAGE DETERMINATION AND OCCUPATIONAL ATTAINMENT IN THE RURAL INDUSTRIAL SECTOR OF CHINA

The development of China's rural township, village, and private enterp rises (TVP), in which real wages have gown at around 11% per annum ove r the past decade, is one of the most remarkable achievements of China 's economic reform. This achievement has taken place despite relativel y rigid control of labor mobility and job assignment by local authorit ies. Individual firms, however, have considerable influence over wage determination. This study applies human capital theory to explore the wage setting process in this sector. It is found that the impact of bo th labor market experience and education reflect labor productivity ra ther than sociopolitical rules of wage setting. The paper employs a le git model to investigate the links between education and occupational attainment The relationship between wages, education, and occupational attainment, for those who find jobs through their own efforts, is sim ilar to that of western market economies. Although education does not affect wages of those assigned jobs it affects their occupational atta inment. (C) 1995 Academic Press, Inc.