The Impact of Employment Types on Labor Income: Evidence from China

The transformation of the labor market driven by digital technology has profoundly affected workers’ income. Based on data from the China Family Panel Studies (CFPS) 2014–2022 and the China Labor-force Dynamic Survey (CLDS) 2012–2018, this paper systematically examines the causal effects of standard employment, traditional non-standard employment (labor dispatch), and new non-standard employment (non-contract employment) on income within a unified framework. This study adopts a progressive identification strategy combining the two-way fixed-effects model, individual fixed-effects model, and event study methodology. The findings are as follows: First, new non-standard employment exhibits a significant “income penalty” effect, with its wage level being 14–15% lower than that of standard employment. This effect remains robust after controlling for individual heterogeneity. Second, dynamic analysis shows that transitioning from standard employment to new non-standard employment leads to sustained income loss, with a decline of nearly 10.8% after four years. Third, mechanism testing reveals that workers increase part-time work to compensate for income loss, but job satisfaction significantly declines, leading to a dual dilemma of “exchanging time for income” and “welfare discount.” Fourth, heterogeneity analysis shows that less educated and rural workers suffer greater shocks. The study concludes that new non-standard employment has inherent income suppression characteristics, and its effects are persistent and heterogeneous. It calls for the improvement of a labor rights protection system that adapts to new forms of employment, as well as the implementation of targeted support policies for vulnerable groups, in order to build a more equitable and secure labor market.