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Urban Insiders versus Rural Outsiders: Complementarity or Competition in China`s Urban Labour Market?

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Author Info

  • John Knight
  • Linda Yueh

Abstract

In China urban residents have traditionally been protected against labour market competition from rural-urban migrants. Over the period of urban economic reform, rural-urban migration was allowed to increase in order to fill the employment gap as growth of labour demand outstripped that of the resident labour force in urban areas. However, as reforms gained pace and controls were lifted, it is plausible that migrants and urban residents increasingly competed. The paper examines whether the relationship is one of complementarity in a still segmented labour market or of substitutability in an increasingly competitive labour market. It uses attitudinal responses from two urban surveys and a panel data set covering the 30 provinces over the period 1994-2000. We obtain very different results from cross-section, random effects and fixed effects panel estimates, raising interesting methodological issues. The findings are consistent with the presence of continued labour market segmentation but suggest also that competition between the two groups may be increasing.

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Bibliographic Info

Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 217.

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Date of creation: 01 Dec 2004
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Handle: RePEc:oxf:wpaper:217

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Keywords: Labour Markets; Wages; China;

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References

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  1. Hausman, Jerry A, 1978. "Specification Tests in Econometrics," Econometrica, Econometric Society, vol. 46(6), pages 1251-71, November.
  2. Appleton, Simon & Knight, John & Song, Lina & Xia, Qingjie, 2002. "Labor retrenchment in China: Determinants and consequences," China Economic Review, Elsevier, vol. 13(2-3), pages 252-275.
  3. Knight, J & Song, L, 1997. "Chinese Peasant Choices : Farming, Rural Industry or Migration," Economics Series Working Papers 99188, University of Oxford, Department of Economics.
  4. John Knight & Lina Song & Jia Huaibin, 1999. "Chinese rural migrants in urban enterprises: Three perspectives," Journal of Development Studies, Taylor & Francis Journals, vol. 35(3), pages 73-104.
  5. Cain, Glen G, 1976. "The Challenge of Segmented Labor Market Theories to Orthodox Theory: A Survey," Journal of Economic Literature, American Economic Association, vol. 14(4), pages 1215-57, December.
  6. Knight, John & Li, Shi, 2005. "Wages, firm profitability and labor market segmentation in urban China," China Economic Review, Elsevier, vol. 16(3), pages 205-228.
  7. Breusch, T S & Pagan, A R, 1980. "The Lagrange Multiplier Test and Its Applications to Model Specification in Econometrics," Review of Economic Studies, Wiley Blackwell, vol. 47(1), pages 239-53, January.
  8. Simon Appleton & John Knight & Lina Song & Qingjie Xia, 2004. "Contrasting paradigms: segmentation and competitiveness in the formation of the chinese labour market," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 2(3), pages 185-205.
  9. John Knight & Lina Song, 2003. "Chinese Peasant Choices: Migration, Rural Industry or Farming," Oxford Development Studies, Taylor & Francis Journals, vol. 31(2), pages 123-148.
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Cited by:
  1. Jason Gagnon & Theodora Xenogiani & Chunbing Xing, 2012. "Are All Migrants Really Worse Off in Urban Labour Markets? New Empirical Evidence from China," Working Papers id:4698, eSocialSciences.
  2. Sylvie Démurger & Marc Gurgand & Shi Li & Yue Ximing, 2008. "Migrants as second-class workers in urban China? A decomposition analysis," Post-Print halshs-00269119, HAL.

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