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Employment Constraints and Sub-optimality in Chinese Enterprises

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  • Knight, John
  • Song, Lina

Abstract

In China the employment of rural migrants is tightly controlled by government, with regard both to numbers and to jobs: urban residents receive preference and are protected against competition from migrants. A survey of enterprises employing both urban residents and rural migrants in four cities is analyzed, using enterprise-level earnings comparisons, employment functions and production functions. The authors find both 'job discrimination' and 'wage discrimination' against migrants. The two groups are highly imperfect substitutes or, in a sense, complementary: migrants do the jobs that nonmigrants will not or cannot do. The marginal product of migrants exceeds their wage whereas that of nonmigrants is below their wage. Although many enterprises have surplus urban workers, they find it beneficial to hire migrant workers as well and are constrained in their employment of migrants. Copyright 1999 by Royal Economic Society.

Suggested Citation

  • Knight, John & Song, Lina, 1999. "Employment Constraints and Sub-optimality in Chinese Enterprises," Oxford Economic Papers, Oxford University Press, vol. 51(2), pages 284-299, April.
    • Handle: RePEc:oup:oxecpp:v:51:y:1999:i:2:p:284-99
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    Cited by:

    1. Jin, Zhangfeng & Pan, Shiyuan, 2020. "Incentive Pay and Firm Productivity: Evidence from China," GLO Discussion Paper Series 479, Global Labor Organization (GLO).
    2. World Bank, 2005. "China : Integration of National Product and Factor Markets, Economic Benefits and Policy Recommendations," World Bank Publications - Reports 8690, The World Bank Group.
    3. Alan de Brauw & Jikun Huang & Scott Rozelle, "undated". "Sequencing and the Success of Gradualism: Empirical Evidence from China's Agricultural Reform," Center for Development Economics 173, Department of Economics, Williams College.
    4. Zhongmin Wu & Yu Zhu, 2004. "Income Differential and Out-migration: the Impacts of Between-gap and Within-gap," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 2(1), pages 27-37.
    5. Zhang, Huafeng, 2010. "The Hukou system's constraints on migrant workers' job mobility in Chinese cities," China Economic Review, Elsevier, vol. 21(1), pages 51-64, March.
    6. Fu, Xiaolan, 2004. "Limited linkages from growth engines and regional disparities in China," Journal of Comparative Economics, Elsevier, vol. 32(1), pages 148-164, March.
    7. Ingrid Nielsen & Chris Nyland & Russell Smyth & Minqiong Zhang, 2007. "Migration and the Right to Social Security: Perceptions of Off‐farm Migrants' Rights to Social Insurance in China's Jiangsu Province," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 15(2), pages 29-43, March.
    8. Wu, Zhongmin & Yao, Shujie, 2003. "Intermigration and intramigration in China: A theoretical and empirical analysis," China Economic Review, Elsevier, vol. 14(4), pages 371-385.
    9. Jin, Zhangfeng, 2020. "Welfare Magnets and Internal Migration in China," GLO Discussion Paper Series 498, Global Labor Organization (GLO).
    10. Junichi Ito, 2008. "The removal of institutional impediments to migration and its impact on employment, production and income distribution in China," Economic Change and Restructuring, Springer, vol. 41(3), pages 239-265, September.
    11. 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.
    12. Ye, Longfeng & Robertson, Peter E., 2019. "Hitting the Great Wall: Structural change and China's growth slowdown," China Economic Review, Elsevier, vol. 56(C), pages 1-1.

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