Residential segregation and employment outcomes of rural migrant workers in China

In China, many rural migrant workers live in urbanising villages that are usually located in peripheral areas of major cities. Different from the spatial mismatch literature in which locations of minorities in the US are constrained by racial discrimination in the housing market, the residential segregation of rural migrant workers in China is largely due to China’s unique institutional context (e.g. land tenure system, hukou system) and the exclusionary housing regulations. Those living in these urbanising villages could incur both negative spatial mismatch effects and positive spillover effects. Through a survey across four mega-regions in China that are currently experiencing the most rapid urbanisation, we collect unique information on rural migrant workers’ attitudes towards living in urbanising villages, and therefore are able to address the self-selection bias that has broadly existed in many previous studies on residential segregation and spatial mismatch. The models show that the net effect of residential segregation in urbanising villages on migrant workers’ employment outcomes (both employment propensity and wage) appears to be positive, suggesting the spillover effects override the spatial mismatch effects. Current policy proposals by government officials to demolish urbanising villages should be accompanied by alternative policies to assist with housing migrant workers in appropriate locations that not only reduce spatial mismatch effects but also maintain positive spillover effects.