Migrants as Second-Class Workers in Urban China? A Decomposition Analysis

Abstract

In urban China, urban resident annual earnings are 1.3 times larger than long term rural migrant earnings as observed in a nationally representative sample in 2002. Using microsimulation, we decompose this difference into four sources, with particular attention to path dependence and statistical distribution of the estimated effects: (1) different allocation to sectors that pay different wages (sectoral effect); (2) hourly wage disparities across the two populations within sectors (wage effect); (3) different working times within sectors (hours effect); (4) different population structures (population effect). Although sector allocation is extremely contrasted, with very few migrants in the public sector and very few urban residents working as self-employed, the sectoral effect is not robust to the path followed for the decomposition. We show that the migrant population has a comparative advantage in the private sector: increasing its participation into the public sector does not necessarily improve its average earnings. The opposite holds for the urban residents. The second main finding is that population effect is significantly more important than wage or hours effects. This implies that the main source of disparity is pre-market (education opportunities) rather than on-market.

Labor Market Conditions and Social Insurance in China

“…24 Using the 2005 and 2010 samples of the China Urban Labor Study, Giles et al (2011) show that migrants are 43 percent less likely to have pension contributions through the employer. In a decomposition study of wage differences in urban workplaces, Démurger et al (2009) compare the explained variance of hukou status as compared to education level. They find that education attainment was the major driver of wage disparities by pre-determining the sector of employment for rural and urban hukou-holders.…”

In Search of a Better Life: The Occupational Attainment of Rural and Urban Migrants in China

“…For example, Meng and Zhang (2001) find that education increases the probability of rural migrants of obtaining a white-collar job. A recent study by Demurger et al (2009) finds that the sectoral difference is not as important as the differences driven by educational attainment. Gagnon et al (2009) first point out the substantial differences in comparing the rural migrants, urban migrants, and urban residents by decomposing the migration effect and hukou effect.…”

“…Studies on the determinants of selection into different occupational sectors (Meng and Zhang, 2001;Demurger et al, 2009;Gagnon et al, 2009) have shown that both education and experience play an important role in the occupational segregation between rural migrants and urban residents. 11 Nonetheless, De Brauw and Giles (2006) point out that many cities have reserved some occupational categories for registered urban residents and that there is a segregation of rural residents into unskilled service and construction sectors or other relatively low-skilled jobs that are unwanted by the urban residents.…”

Informal search, bad search?: the effects of job search method on wages among rural migrants in urban China

“…Despite China's strict household registration (hukou) system that remains in effect to control labor migration, the rural migrants in urban cities increased from about 30 millions in 1989, to 62 millions in 1993, and further to 145 millions in 2010 (Demurger et al, 2009;National Bureau of Statistics, 2010). Also well documented is the important role of social networkfamily, friends, and acquaintances -in the Chinese rural-urban migration.…”

“…Given its negative wage effects, the widespread use of social networks in the job search process could thus contribute to the increase in the withingroup inequality among rural migrants and hence overall inequality in China. 4 Similarly, due to its significant wage impacts, the use of informal job search method could also play a potentially important role in understanding between-group inequality such as the wage gap between rural migrants and urban residents (e.g., Meng and Zhang, 2001;Demurger et al, 2009), or between rural migrants and urban migrants (Messinis, 2013). 5 Second, together with other empirical evidence obtained in the literature, our paper could help to characterize some important features of China's labor market and economy.…”