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Social Identity and Inequality: The Impact of China's Hukou System

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Author Info

  • Afridi, Farzana

    () (Indian Statistical Institute)

  • Li, Sherry Xin

    () (University of Texas at Dallas)

  • Ren, Yufei

    () (Union College)

Abstract

We conduct an experimental study to investigate the causal impact of social identity on individuals' response to economic incentives. We focus on China's household registration (hukou) system which favors urban residents and discriminates against rural residents in resource allocation. Our results indicate that making individuals' hukou status salient and public significantly reduces the performance of rural migrant students on an incentivized cognitive task by 10 percent, which leads to a significant leftward shift of their earnings distribution. The results demonstrate the impact of institutionally imposed social identity on individuals' intrinsic response to incentives, and consequently on widening income inequality.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6417.

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Length: 41 pages
Date of creation: Mar 2012
Date of revision:
Handle: RePEc:iza:izadps:dp6417

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Keywords: social identity; inequality; field experiment; hukou; China;

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References

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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. If you pay peanuts . . . Part Two (self fulfilling prophecy edition): if you treat people badly, you get the worst out of them
    by Nicholas Gruen in Club Troppo on 2012-04-07 07:00:41
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Cited by:
  1. Hodaka Morita & Maroš Servátka, 2011. "Group Identity and Relation-Specific Investment: An Experimental Investigation," Working Papers in Economics 11/01, University of Canterbury, Department of Economics and Finance.
  2. Daniel John Zizzo, 2012. "Inducing natural group identity: A RDP analysis," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 12-01, School of Economics, University of East Anglia, Norwich, UK..
  3. Stuart Cameron & UNICEF Innocenti Research Centre, 2012. "Education, Urban Poverty and Migration: Evidence from Bangladesh and Vietnam," Innocenti Working Papers inwopa679, UNICEF Innocenti Research Centre.
  4. Binkai Chen & Ming Lu & Ninghua Zhong, 2012. "Hukou and Consumption Heterogeneity: Migrants' Expenditure Is Depressed by Institutional Constraints in Urban China," Global COE Hi-Stat Discussion Paper Series gd11-221, Institute of Economic Research, Hitotsubashi University.
  5. Hoff, Karla & Pandey, Priyanka, 2012. "Making up people -- the effect of identity on preferences and performance in a modernizing society," Policy Research Working Paper Series 6223, The World Bank.
  6. Cheng, Wenya & Morrow, John & Tacharoen, Kitjawat, 2013. "Productivity As If Space Mattered: An Application to Factor Markets Across China," MPRA Paper 45743, University Library of Munich, Germany.
  7. Uwe Dulleck & Jonas Fooken & Yumei He, 2012. "Public Policy and Individual Labor Market Discrimination: An Artefactual Field Experiment in China," QuBE Working Papers 002, QUT Business School.

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