In the second decade of market reform, rural cadre and entrepreneur households enjoy large net income advantages of roughly equal magnitude. Cadre household incomes are primarily from salaries, and they do not decline with increasing levels of rural industrialization. These cross-sectional findings about income determination are reinforced by an event-history analysis of occupational shifts. With large income advantages based on salary income, at no point in market reform have cadres moved into self-employment or private entrepreneurship at higher rates than ordinary farmers. However, village cadres have become the most important source of collective enterprise managers and collective enterprise managers in turn have become the most important source of new private entrepreneurs. Therefore the thriving collective enterprise sector of the 1980's has served as a breeding ground for private enterprise in the 1990's.