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Self-employment of rural-to-urban migrants in China

Author

Listed:
  • Corrado Giulietti
  • Guangjie Ning
  • Klaus F. Zimmermann

Abstract

Purpose - The purpose of this paper is to explore the determinants of self-employment among rural to urban migrants in China. Design/methodology/approach - The analysis is based on a sample of migrant household heads from the 2008 Rural-Urban Migration in China and Indonesia (RUMiCI) survey. An estimate of the wage differential between self-employed and employed workers is obtained by means of an endogenous switching model and used to estimate the employment choice. The procedure is extended to account for migration selectivity bias, for alternative statuses before migration, and for different post-migration employment histories. Findings - Self-employed migrants are positively selected with respect to their unobserved characteristics; their wages are substantially higher than what they would have obtained had they chosen paid work. Furthermore, even after accounting for the substantial heterogeneity across cities, industries, occupations, and after correcting for the migration selectivity bias, the wage differential is found to be an important determinant of self-employment. Research limitations/implications - The finding that market imperfections do not constrain the self-employment choice of migrants does not imply that reforms designed to eliminate institutional barriers are undesirable. Policy should target the reduction of gaps between urban residents and migrants (such as the household registration system – Originality/value - The paper analyses the determinants of self-employment using a recent survey based on a sample of rural-to-urban migrants in China. The key findings indicate that migrants who choose self-employment are positively selected in terms of their unobservable characteristics. Moreover, the wage differential has a strong positive effect on the probability of choosing self-employment. In the transition to a market economy, which is taking place in China, the identification of the determinants of self-employment is crucial.

Suggested Citation

  • Corrado Giulietti & Guangjie Ning & Klaus F. Zimmermann, 2012. "Self-employment of rural-to-urban migrants in China," International Journal of Manpower, Emerald Group Publishing, vol. 33(1), pages 96-117, March.
  • Handle: RePEc:eme:ijmpps:v:33:y:2012:i:1:p:96-117
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Zheng, Liang & Zhao, Zhong, 2017. "What drives spatial clusters of entrepreneurship in China? Evidence from economic census data," China Economic Review, Elsevier, vol. 46(C), pages 229-248.
    2. Elaine Liu & Paul Frijters & Tao Sherry Kong, 2013. "Who is Coming to the Experiment? A Cautionary Tale from China," Working Papers 201309854, Department of Economics, University of Houston.
    3. Song, Yang, 2014. "What should economists know about the current Chinese hukou system?," China Economic Review, Elsevier, vol. 29(C), pages 200-212.
    4. Mehtap Akgüç & Corrado Giulietti & Klaus Zimmermann, 2014. "The RUMiC longitudinal survey: fostering research on labor markets in China," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-14, December.
    5. Peter Simmons & Yuanyuan Xie, 2013. "Three musketeers: A dynamic model of capital inflow (FDI), the real wage rate and the net migration flow with empirical application," Discussion Papers 13/28, Department of Economics, University of York.
    6. Junfu Zhang & Zhong Zhao, 2015. "Social-family network and self-employment: evidence from temporary rural–urban migrants in China," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-21, December.
    7. repec:wsi:serxxx:v:62:y:2017:i:02:n:s0217590815500885 is not listed on IDEAS
    8. Cui, Yuling & Nahm, Daehoon & Tani, Massimiliano, 2012. "The Determinants of Rural Migrants' Employment Choice in China: Results from a Joint Estimation," IZA Discussion Papers 6968, Institute for the Study of Labor (IZA).
    9. repec:eme:rleczz:s0147-9121(2013)0000037007 is not listed on IDEAS
    10. Cui, Yuling & Nahm, Daehoon & Tani, Massimiliano, 2013. "Self-Employment in China: Are Rural Migrant Workers and Urban Residents Alike?," IZA Discussion Papers 7191, Institute for the Study of Labor (IZA).
    11. Corrado Giulietti & Jackline Wahba & Klaus F. Zimmermann, 2013. "Entrepreneurship of the Left-Behind," Research in Labor Economics,in: Labor Market Issues in China, volume 37, pages 65-92 Emerald Publishing Ltd.
    12. Akgüc, Mehtap & Liu, Xingfei & Tani, Massimiliano, 2014. "Expropriation with Hukou Change: Evidence from a Quasi-Natural Experiment," IZA Discussion Papers 8689, Institute for the Study of Labor (IZA).
    13. Villalobos Barría, Carlos & Klasen, Stephan, 2016. "The impact of SENAI's vocational training program on employment, wages, and mobility in Brazil: Lessons for Sub Saharan Africa?," The Quarterly Review of Economics and Finance, Elsevier, vol. 62(C), pages 74-96.
    14. Fields, Gary S. & Song, Yang, 2013. "A Theoretical Model of the Chinese Labor Market," IZA Discussion Papers 7278, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    China; Self employed workers; Pay; Migrants; Wages; Surveys; Rural to urban migration; Selection bias;

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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