This paper analyses the determinants of wage differentials between five categories of enterprises
(state-owned enterprises at central or provincial level, local publicly-owned enterprises, urban
collective enterprises, private or individual enterprises and foreign-invested enterprises), in urban
China in 1995. We find higher wages in state-owned enterprises and foreign-invested enterprises
compared to collective and domestic private enterprises, but no significant difference in hourly
wages between state-owned enterprises and foreign-invested enterprises in 1995. Indeed,
although foreign-invested enterprises allow for higher global annual income, it is at the cost of
longer working hours. Moreover, we find strong evidence for segmentation on the Chinese
labour market in 1995, segmentation being the major determinant of observed differences in
average wages between enterprises’ types. In particular, we find a strong segmentation in favour
of state-owned enterprises at central or provincial level against foreign-invested enterprises,
average wages in foreign-invested enterprises meeting those in state-owned enterprises only
because workers in foreign-invested enterprises have on average better socio-economic
characteristics and in particular a higher education attainment.