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Social-Family Network and Self-Employment: Evidence from Temporary Rural-Urban Migrants in China

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  • Zhang, Junfu

    () (Clark University)

  • Zhao, Zhong

    () (Renmin University of China)

Abstract

We hypothesize that individuals with a larger social-family network are more likely to choose self-employment. We test this hypothesis using data on temporary rural-urban migrants in China. The size of a migrant’s social-family network is measured by the number of relatives and friends this migrant greeted during the past Spring Festival. Our empirical analysis faces two challenges. First, there is an endogeneity problem in that a migrant may want to develop and maintain a large social-family network exactly because he is self-employed. For this reason, a simple correlation between the probability of being self-employed and the size of the migrant’s social-family network cannot be interpreted as causal. Second, the size of the social-family network is measured using survey data, which is subject to measurement error. To overcome these problems, we take an instrumental variable (IV) approach. More specifically, we examine the distance an individual migrated when he first moved to a city and use this variable to instrument for the current size of the social-family network. We establish the credibility of the IV by emphasizing the unique institutional context of rural-urban migration in China and focusing on the sample of migrants who originally started as wage workers in urban areas and currently are not in their first jobs. Our IV results indeed show that a rural-urban migrant with a larger social-family network is more likely to be self-employed in the city. This finding is robust to alternative model specifications and various restrictions on the sample used in estimation.

Suggested Citation

  • Zhang, Junfu & Zhao, Zhong, 2011. "Social-Family Network and Self-Employment: Evidence from Temporary Rural-Urban Migrants in China," IZA Discussion Papers 5446, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp5446
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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. 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.
    3. repec:eee:chieco:v:49:y:2018:i:c:p:197-209 is not listed on IDEAS
    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. Ha, Wei & Yi, Junjian & Yuan, Ye & Zhang, Junsen, 2016. "The dynamic effect of rural-to-urban migration on inequality in source villages: System GMM estimates from rural China," China Economic Review, Elsevier, vol. 37(C), pages 27-39.
    6. Ma, Xinxin & Li, Shi, 2016. "Economic Transition and the Determinants of Self-employment in Urban China: 2007-2013," CEI Working Paper Series 2016-3, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    7. Giulietti, Corrado & Wahba, Jackline & Zenou, Yves, 2018. "Strong versus weak ties in migration," European Economic Review, Elsevier, vol. 104(C), pages 111-137.
    8. repec:taf:jdevst:v:53:y:2017:i:8:p:1178-1193 is not listed on IDEAS
    9. 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).
    10. Zhang, Junfu & Zhao, Zhong, 2013. "Measuring the Income-Distance Tradeoff for Rural-Urban Migrants in China," IZA Discussion Papers 7160, Institute for the Study of Labor (IZA).
    11. Christophe Jalil Nordman, 2016. "Do family and kinship networks support entrepreneurs?," IZA World of Labor, Institute for the Study of Labor (IZA), pages 262-262, May.
    12. Qu, Zhaopeng & Zhao, Zhong, 2017. "Glass ceiling effect in urban China: Wage inequality of rural-urban migrants during 2002–2007," China Economic Review, Elsevier, vol. 42(C), pages 118-144.
    13. Zhang, Yi & Matz, Julia Anna, 2017. "On the train to brain gain in rural China," Discussion Papers 252443, University of Bonn, Center for Development Research (ZEF).
    14. Veronica Escudero & Elva Lopez Mourelo, 2014. "Understanding the Drivers of the Youth Labour Market in Kenia," AIEL Series in Labour Economics,in: Dario Sciulli & Miguel Ángel Malo (ed.), Disadvantaged Workers, edition 1, chapter 10, pages 203-228 AIEL - Associazione Italiana Economisti del Lavoro.
    15. repec:eee:wdevel:v:105:y:2018:i:c:p:428-442 is not listed on IDEAS
    16. repec:ilo:ilowps:485514 is not listed on IDEAS

    More about this item

    Keywords

    social-family network; self-employment; rural-urban migrants;

    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
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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