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Self-Employment in China: Are Rural Migrant Workers and Urban Residents Alike?

  • Cui, Yuling

    ()

    (Macquarie University, Sydney)

  • Nahm, Daehoon

    ()

    (Macquarie University, Sydney)

  • Tani, Massimiliano

    ()

    (IZA)

Registered author(s):

This paper studies differences in the motivation to be self-employed between rural migrants and urban residents in modern China. Estimates of the wage differential between self-employment and paid-employment obtained through a three-stage methodology using the 2002 China Household Income Project (CHIP), reveal that rural migrants become self-employed to avoid low-pay city jobs, enhancing their odds of economic assimilation. Conversely, urban residents become entrepreneurs to move out of unemployment. The empirical analysis confirms that self-employment also attracts married individuals and those in good health, while it negatively relates to high educational attainment. The decomposition of hourly wage differences between pairs (by type of employment and residence status) shows that higher hourly wages of paid and self-employed urbanites over migrants predominantly arise through differences in coefficients (i.e. "discrimination") while those between self- and paid employment among urbanites are mostly due to differences in individual characteristics. Discrimination overwhelmingly accounts for hourly wage differences between self- and paid employment among rural immigrants. We interpret the relevant effect of discrimination in 2002 in urban labour markets as a sign of the institutional barriers associated with the Hukou system.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7191.

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Length: 33 pages
Date of creation: Jan 2013
Date of revision:
Handle: RePEc:iza:izadps:dp7191
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  1. 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.
  2. Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 808-27, August.
  3. Barton H. Hamilton, 2000. "Does Entrepreneurship Pay? An Empirical Analysis of the Returns to Self-Employment," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 604-631, June.
  4. David B. Audretsch & Roy Thurik & Andre van Stel & M.A. Carree, 2006. "Does Self-Employment Reduce Unemployment?," Papers on Entrepreneurship, Growth and Public Policy 2005-07, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  5. Constant, Amelie F. & Zimmermann, Klaus F., 2004. "The Making of Entrepreneurs in Germany: Are Native Men and Immigrants Alike?," IZA Discussion Papers 1440, Institute for the Study of Labor (IZA).
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  14. Andersson Joona, Pernilla & Wadensjö, Eskil, 2004. "Self-Employed Immigrants in Denmark and Sweden: A Way to Economic Self-Reliance?," IZA Discussion Papers 1130, Institute for the Study of Labor (IZA).
  15. Magnus Lofstrom, 2002. "Labor market assimilation and the self-employment decision of immigrant entrepreneurs," Journal of Population Economics, Springer, vol. 15(1), pages 83-114.
  16. Rees, Hedley & Shah, Anup, 1986. "An Empirical Analysis of Self-employment in the U.K," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 1(1), pages 95-108, January.
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  18. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
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  22. repec:cup:cbooks:9780521828130 is not listed on IDEAS
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