The Effect of Labour Market Reforms on the Good Health Earnings Premium in China

Abstract

The labour market reforms in China resulted in a greater emphasis on labour market productivity in earnings determination. This is reflected in the rapid increase in the estimated returns to schooling between the pre-reform and post-reform periods. At the same time the importance of labour market experience, or seniority, as a determinant of earnings decreased following the implementation of the reforms. Similarly, following the labour market reforms, the role of self-assessed indicators of health in earnings determination appears to have decreased, and the role of objective indicators of health has increased. These changes have been less intense in rural areas than in urban areas. As such they suggest that the main drivers of economic growth in China are the urban areas.