Institution and Inequality in Transitional Urban China: Earnings and Employment of Migrants and Non-migrants

Abstract

This dissertation focuses on labour market returns of migrants and non-migrants in transitional urban China. Literature on internal migrants in urban China reveals different perspectives on whether internal migrants have higher or lower labour market returns than urban residents. Labour market segmentation theory highlights the effect of an institutional barrier, the Hukou system, and suggests that migrants are placed in the lower segment of the market while urban residents have many advantages over migrants. On the contrary, migration selectively literature suggests migrants in urban China are positively selected and have higher quality than non-migrants, thus suggesting that migrants have higher-level returns than non-migrants. Market transition theory provides a transitional view and suggests the inequality caused by the Hukou system is decreasing with the development of a market economy, with competitiveness increasing among both migrants and urban non-migrants. The main objective of this research is to examine the differences in earnings and occupational attainments among different population groups - urban non-migrants, temporary migrants and permanent migrants - and their changes over time, and to examine factors that contribute to the changes. Three key factors, Hukou reforms, development of market mechanisms and migration selectivity, are highlighted in this study. Using CGSS 2003 and 2008, the empirical analysis shows that first, the independent effect of migrant status on earnings was significant in 2003 but not significant in 2008, however, migrant status had a significant independent effect on individuals’ occupational attainments in both 2003 and 2008. Second, migration selection had significant and positive effects on individual’s earnings and occupational attainments in both 2003 and 2008. Third, migrants with urban Hukou status have an advantage in labour market returns. Urban migrants (temporary and permanent migrants from urban to urban) had a net earnings advantage over urban non-migrants in two years of 2003 and 2008; permanent migrants (permanent migrants from rural to urban and from urban to urban) had an advantage in occupational attainments over urban non-migrants in both 2003 and 2008. The mixed findings of decreased effects of migrant status on individual’s earnings from 2003 to 2008 and the remaining effect of migrant status on individual’s occupational attainment from 2003 to 2008 indicate that both segmentation and competition exist in urban labour markets in China. This reflects the nature of China’s transition from a planned to a market economy, where growing market forces co-exist with institutional legacies. Migrants in China are positively selected and migration experience contributes positive returns on earnings and occupational attainments.