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IntroductionLabor-market segmentation is of concern for several reasons. Segmented labor markets are a major cause of economic inefficiency because excluding a majority of workers from access to many labor-market segments wastes human resources and reduces the flexibility of the labor market to cope with economic change (Anker, 1997). Segmentation induced by gender, ethnicity, or race marginalizes certain social groups and contributes to social inequality (Boston, 1990). Research into the dynamics of labormarket transformation, both the mechanisms and the outcomes of change, provides an important means of understanding the changes in economies and social welfare.Although labor-market segmentation in developed economies has been studied extensively (Bauder, 2003;Hanson and Pratt, 1991;Peck, 1996), there are growing interests in and concerns over the changing patterns of labor markets in developing economies (Fan, 2002;Gindling, 1991). As a developing nation, China has experienced dramatic social and economic changes over the last two-and-a-half decades during its transition from a centrally planned system to a`socialist market economy' (Oi, 1999;Walder, 1995;Xu and Tan, 2001). During this process of economic transition, massive changes in the Chinese labor market have resulted in a new relation between labor supply and demand (

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