Organization size and economic stratification in urban China: 1996–2006

Abstract

A well-documented finding in social stratification research is that employees in larger work organizations earn more than those in smaller ones. This research first extends the institutional context of this topic from the typical market economy to transitional China. Mainly using two sets of nationally representative survey data, the research examines the changing pattern of size-earnings relation from 1996 to 2006. Results show that a significant size-earnings premium also exists in urban China and that it doubled during this 10-year period. Moreover, individual and organizational characteristics played contrasting roles in explaining the observed size-earnings relationship. Specifically, individual characteristics had no impact on the size effect in 1996 but did reduce it in 2006; on the contrary, organizational characteristics partly explain the size effect in 1996 but not in 2006. These findings are explained as the results of increasing labor mobility and a declining redistributive mechanism during this period, thus suggesting the development of China's urban labor market.