Scholars pay much attention to “how teachers are paid ?” It is a topic concerning pay differentials which are interwoven with social justice, working morale and worker quality.

The received theory of Hedonic Wage Function, which is originated by the founding father of economics --Adam Smith in 1776 in England, and elaborated by several well-know European econometricians such as Tinbergen, Roy, is the main framework for interpreting the mechanism behind the pay variation among workers. Rosen extends the interpretation by incorporating it into the conception of “implicit price” or “shadow price”.

The theory is well recognized in the European and American labor market, but not the case in China. Moreover, the latest research demonstrates that the hedonic wage function does not behave well in the public sectors such as teacher labor market, whose non-price rationing and wages are “set administratively or, more generally, do not clear the pertinent markets for job and worker attributes”. Thus, the paper would like to test the applicability of hedonic wage theory under the Mainland Chinese context, with public primary schoolteachers being the sample of examination.

The proposed creed about pay differential—it is “who you are, what you do and where you work” that matters with respect to labor earnings embodied in the hedonic wage theory is employed as the theoretical framework to decipher the “social foundation for pay policy” codes. Concretely speaking, the hedonic wage function decompose the pay differentials into two components, one is for the person-specific characteristics, such as years of schooling, working experience. The other is for the job-specific attributes such as locality of the position, rewarding packages of the job.

 Based on annual statistics 2008 released by the National Bureau of Statistics of China, two consequential yet sequential questions about the pay differentials among public primary schoolteachers are raised and tested quantitatively, (1) what correlate to teachers’ pay differentials and how large is the effect size of each variate? (The sources of pay differentials and their relative weights). (2) How the identifiable factors interact with one another?

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