IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp5805.html
   My bibliography  Save this paper

Self-Employment of Rural-to-Urban Migrants in China

Author

Listed:
  • Giulietti, Corrado

    () (University of Southampton)

  • Ning, Guangjie

    () (Nankai University)

  • Zimmermann, Klaus F.

    () (University of Bonn)

Abstract

This paper focuses on the determinants of self-employment among rural to urban migrants in China. Two self-selection mechanisms are analysed: the first relates to the manner in which migrants choose self-employment or paid work based on the potential gains from either type of employment; the second takes into account that the determinants of the migration decision can be correlated with employment choices. Using data from the 2008 Rural-Urban Migration in China and Indonesia (RUMiCI) survey, a selection model with endogenous switching is estimated. Earnings estimates are then used to derive the wage differential, which in turn is used to model the employment choice. The procedure is extended to account for migration selectivity and to compare individuals with different migration background and employment histories. The results indicate that self-employed individuals are positively selected with respect to their unobserved characteristics. Furthermore, the wage differential is found to be an important driver of the self-employment choice.

Suggested Citation

  • Giulietti, Corrado & Ning, Guangjie & Zimmermann, Klaus F., 2011. "Self-Employment of Rural-to-Urban Migrants in China," IZA Discussion Papers 5805, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp5805
    as

    Download full text from publisher

    File URL: http://ftp.iza.org/dp5805.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Willis, Robert J & Rosen, Sherwin, 1979. "Education and Self-Selection," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 7-36, October.
    2. Arias, Omar & Khamis, Melanie, 2008. "Comparative Advantage, Segmentation and Informal Earnings: A Marginal Treatment Effects Approach," IZA Discussion Papers 3916, Institute of Labor Economics (IZA).
    3. Herbert Brücker & Parvati Trübswetter, 2007. "Do the best go west? An analysis of the self-selection of employed East-West migrants in Germany," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 34(4), pages 371-395, September.
    4. Blanchflower, David G & Oswald, Andrew J, 1998. "What Makes an Entrepreneur?," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 26-60, January.
    5. Chiswick, Barry R, 1978. "The Effect of Americanization on the Earnings of Foreign-born Men," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 897-921, October.
    6. Catalina Amuedo-Dorantes & Kusum Mundra, 2007. "Social networks and their impact on the earnings of Mexican Migrants," Demography, Springer;Population Association of America (PAA), vol. 44(4), pages 849-863, November.
    7. Constant, Amelie F. & Zimmermann, Klaus F., 2005. "Legal Status at Entry, Economic Performance, and Self-employment Proclivity: A Bi-national Study of Immigrants," IZA Discussion Papers 1910, Institute of Labor Economics (IZA).
    8. Hongbin Li & Zheyu Yang & Xianguo Yao & Junsen Zhang, 2009. "Entrepreneurship and Growth: Evidence from China," Discussion Papers 00022, Chinese University of Hong Kong, Department of Economics.
    9. Gagnon, Jason & Xenogiani, Theodora & Xing, Chunbing, 2009. "Are all migrants really worse off in urban labour markets: new empirical evidence from China," MPRA Paper 16109, University Library of Munich, Germany.
    10. Rosen, Harvey S., 1979. "Housing decisions and the U.S. income tax : An econometric analysis," Journal of Public Economics, Elsevier, vol. 11(1), pages 1-23, February.
    11. Meng, Xin & Zhang, Junsen, 2001. "The Two-Tier Labor Market in Urban China: Occupational Segregation and Wage Differentials between Urban Residents and Rural Migrants in Shanghai," Journal of Comparative Economics, Elsevier, vol. 29(3), pages 485-504, September.
    12. Birgitta Rabe, 2011. "Dual-earner migration. Earnings gains, employment and self-selection," Journal of Population Economics, Springer;European Society for Population Economics, vol. 24(2), pages 477-497, April.
    13. Lee, Lung-Fei, 1978. "Unionism and Wage Rates: A Simultaneous Equations Model with Qualitative and Limited Dependent Variables," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 19(2), pages 415-433, June.
    14. Paul Frijters & Leng Lee & Xin Meng, 2010. "Jobs, Working Hours and Remuneration Packages for Migrant and Urban Workers," Chapters, in: Xin Meng & Chris Manning & Li Shi & Tadjuddin Nur Effendi (ed.), The Great Migration, chapter 3, Edward Elgar Publishing.
    15. Nopo, Hugo R. & Valenzuela, Patricio, 2007. "Becoming an Entrepreneur," IZA Discussion Papers 2716, Institute of Labor Economics (IZA).
    16. Veall, Michael R & Zimmermann, Klaus F, 1996. "Pseudo-R-[superscript 2] Measures for Some Common Limited Dependent Variable Models," Journal of Economic Surveys, Wiley Blackwell, vol. 10(3), pages 241-259, September.
    17. Sherry Tao Kong, 2010. "Rural–Urban Migration in China: Survey Design and Implementation," Chapters, in: Xin Meng & Chris Manning & Li Shi & Tadjuddin Nur Effendi (ed.), The Great Migration, chapter 7, Edward Elgar Publishing.
    18. Hugo Ñopo & Patricio Valenzuela, 2007. "Becoming an Entrepreneur," Research Department Publications 4519, Inter-American Development Bank, Research Department.
    19. David Roodman, 2009. "Estimating Fully Observed Recursive Mixed-Process Models with cmp," Working Papers 168, Center for Global Development.
    20. 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.
    21. Song, Lina & Appleton, Simon, 2008. "Social Protection and Migration in China: What Can Protect Migrants from Economic Uncertainty?," IZA Discussion Papers 3594, Institute of Labor Economics (IZA).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    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. Shackleton, C.M. & Drescher, A. & Schlesinger, J., 2020. "Urbanisation reshapes gendered engagement in land-based livelihood activities in mid-sized African towns," World Development, Elsevier, vol. 130(C).
    3. 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.
    4. 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 of Labor Economics (IZA).
    5. Akgüc, Mehtap & Liu, Xingfei & Tani, Massimiliano, 2014. "Expropriation with Hukou Change: Evidence from a Quasi-Natural Experiment," IZA Discussion Papers 8689, Institute of Labor Economics (IZA).
    6. Fields, Gary S. & Song, Yang, 2013. "A Theoretical Model of the Chinese Labor Market," IZA Discussion Papers 7278, Institute of Labor Economics (IZA).
    7. 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.
    8. 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.
    9. Li Yu & Xundong Yin & Xiang Zheng & Wenwei Li, 2017. "Lose to win: entrepreneurship of returned migrants in China," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 58(2), pages 341-374, March.
    10. Cheng, Zhiming & Guo, Wei & Hayward, Mathew & Smyth, Russell & Wang, Haining, 2021. "Childhood adversity and the propensity for entrepreneurship: A quasi-experimental study of the Great Chinese Famine," Journal of Business Venturing, Elsevier, vol. 36(1).
    11. 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.
    12. Chen, Xiaofen, 2018. "Why do migrant households consume so little?," China Economic Review, Elsevier, vol. 49(C), pages 197-209.
    13. Song, Yang, 2014. "What should economists know about the current Chinese hukou system?," China Economic Review, Elsevier, vol. 29(C), pages 200-212.
    14. 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.
    15. Yuling Cui & Daehoon Nahm & Massimiliano Tani, 2017. "Employment Choice And Ownership Structure In Transitional China," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 62(02), pages 325-344, June.
    16. Cui, Yuling & Nahm, Daehoon & Tani, Massimiliano, 2013. "Self-Employment in China: Are Rural Migrant Workers and Urban Residents Alike?," IZA Discussion Papers 7191, Institute of Labor Economics (IZA).
    17. Corrado Giulietti & Jackline Wahba & Klaus F. Zimmermann, 2013. "Entrepreneurship of the Left-Behind," Research in Labor Economics, in: Corrado Giulietti & Konstantinos Tatsiramos & Klaus F. Zimmermann (ed.), Labor Market Issues in China, volume 37, pages 65-92, Emerald Publishing Ltd.
    18. Jonathan Haughton & Wendi Sun & Le Thi Thanh Loan, 2018. "Discrimination against Migrants in Urban Vietnam," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 24(3), pages 211-232, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yuling Cui & Daehoon Nahm & Massimiliano Tani, 2017. "Employment Choice And Ownership Structure In Transitional China," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 62(02), pages 325-344, June.
    2. Xiahai Wei & Tony Fang & Yang Jiao & Jiahui Li, 2019. "Language Premium Myth or Fact: Evidence from Migrant Workers of Guangdong, China," Journal of Labor Research, Springer, vol. 40(3), pages 356-386, September.
    3. Maurer-Fazio, Margaret & Connelly, Rachel & Thi Tran, Ngoc-Han, 2015. "Do Negative Native-Place Stereotypes Lead to Discriminatory Wage Penalties in China's Migrant Labor Markets?," IZA Discussion Papers 8842, Institute of Labor Economics (IZA).
    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. Cui, Yuling & Nahm, Daehoon & Tani, Massimiliano, 2013. "Self-Employment in China: Are Rural Migrant Workers and Urban Residents Alike?," IZA Discussion Papers 7191, Institute of Labor Economics (IZA).
    6. Fendel Tanja, 2016. "Migration and Regional Wage Disparities in Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 236(1), pages 3-35, February.
    7. Gagnon, Jason & Xenogiani, Theodora & Xing, Chunbing, 2009. "Are all migrants really worse off in urban labour markets: new empirical evidence from China," MPRA Paper 16109, University Library of Munich, Germany.
    8. Amelie F. Constant & Annabelle Krause & Ulf Rinne & Klaus F. Zimmermann, 2017. "Reservation wages of first- and second-generation migrants," Applied Economics Letters, Taylor & Francis Journals, vol. 24(13), pages 945-949, July.
    9. Abramitzky, Ran, 2009. "The effect of redistribution on migration: Evidence from the Israeli kibbutz," Journal of Public Economics, Elsevier, vol. 93(3-4), pages 498-511, April.
    10. Holzer, Harry J, 1987. "Informal Job Search and Black Youth Unemployment," American Economic Review, American Economic Association, vol. 77(3), pages 446-452, June.
    11. Aysit Tansel & Elif Oznur Acar, 2016. "The Formal/Informal Employment Earnings Gap: Evidence from Turkey," Research on Economic Inequality, in: John A. Bishop & Juan Gabriel Rodríguez (ed.), Inequality after the 20th Century: Papers from the Sixth ECINEQ Meeting, volume 24, pages 121-154, Emerald Publishing Ltd.
    12. Martin Junge & Martin D. Munk & Panu Poutvaara, 2013. "International Migration of Couples," Norface Discussion Paper Series 2013018, Norface Research Programme on Migration, Department of Economics, University College London.
    13. Brenner, Jan, 2010. "Life-cycle variations in the association between current and lifetime earnings: Evidence for German natives and guest workers," Labour Economics, Elsevier, vol. 17(2), pages 392-406, April.
    14. Y. Wu, 1998. "Redundancy and Firm Characteristics in Chinese State-owned Enterprises," Economics Discussion / Working Papers 98-17, The University of Western Australia, Department of Economics.
    15. Suqin Ge & Fang Yang, 2013. "Accounting For The Gender Gap In College Attainment," Economic Inquiry, Western Economic Association International, vol. 51(1), pages 478-499, January.
    16. DeCicca, Philip & Kenkel, Donald & Liu, Feng, 2013. "Excise tax avoidance: The case of state cigarette taxes," Journal of Health Economics, Elsevier, vol. 32(6), pages 1130-1141.
    17. A. Rashad Abdel†Khalik, 1990. "The jointness of audit fees and demand for MAS: A self†selection analysis," Contemporary Accounting Research, John Wiley & Sons, vol. 6(2), pages 295-322, March.
    18. A.T. Le, 1998. "Empirical Studies of Self employment," Economics Discussion / Working Papers 98-11, The University of Western Australia, Department of Economics.
    19. Chen, Xiaofen, 2018. "Why do migrant households consume so little?," China Economic Review, Elsevier, vol. 49(C), pages 197-209.
    20. Yu Xie & Margaret Gough, 2011. "Ethnic Enclaves and the Earnings of Immigrants," Demography, Springer;Population Association of America (PAA), vol. 48(4), pages 1293-1315, November.

    More about this item

    Keywords

    rural to urban migration; selection bias magnets; self-employment; European Union; wages;
    All these keywords.

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp5805. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Holger Hinte). General contact details of provider: http://www.iza.org .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.