In urban areas of China, economic reforms were intensely implemented after
1984. We focus on two primary aspects of the reforms in the 1990s, those pertaining
to the labor market and to wages. Based on original interviews and two unique
household data sets, we investigate the effects of the reforms. Our first finding is
that the components of annual income have changed, reflecting fewer subsidies
and more diverse sources of income (such as self-employment), over the period
from 1995 to 1999. By 1999, the wage structure reflects less seniority-based pay,
allows for more discretion in rewarding non-productive characteristics (gender and
Communist Party membership, for example) and also permits more productivityrelated
pay (as evidenced by increased returns to human capital).