Rural–urban migration and wage determination: The case of Tianjin, China
Introduction
The economic reform in China that started in 1978 has created a “floating population” as over 100 million people have left their villages and streamed into cities where manufacturing and businesses boom. The migration of labor from agricultural to non-agricultural industries has increased the average income of rural people as migrant workers send a significant portion of their income back home. At the same time, rural migrant laborers have made great contributions to economic growth by complementing the labor force of cities and providing low-cost work. However, the benefits from economic growth have not been fairly shared between urban and migrant workers, and clear disparities exist in China's urban and rural labor markets. It is estimated that between 12 and 15 million non-farm jobs will be required annually just to absorb this surplus labor (Johnson, 2002).
Rural migrants generally make less money, receive far fewer benefits, and have no health insurance. Most live in precarious dormitories provided by their employers if they have any housing. Rural surplus laborers who moved to urban areas are called mingong to mark their difference from the city-dwelling workers. Rural migrants are treated as strangers and outsiders in cities. They are denied formal urban membership and substantive rights and their children are largely prohibited from attending city schools.
The urban–rural disparities in China's labor market may be categorized into two types. The first difference relates to productivity-related characteristics, such as education and job training, and the second relates to non-productivity-related characteristics, such as race, gender, or in our case, hukou status, which also could affect labor status. Discrimination is present if equally productive individuals within the same enterprise are treated differently simply because of their hukou status.
In order to promote labor mobility and efficiency and to improve equality and social stability, it is important to first understand the motivations for migration and then examine the conditions that migrants encounter. Why do farmers migrate to cities? What are characteristics of migrants? What factors determine wages? Are migrant workers discriminated in China's urban labor market? To answer these questions, a survey of employees was conducted from October to December 2003 in Tianjin, one of the four central government municipalities in China. We found that, in addition to economic and social-demographic factors such as ownership of business, education, experience, and age, the restrictive hukou system has negatively influenced migrants' income. This paper limits its discussions to migrant and non-migrant workers with migrant workers defined as those not having Tianjin hukou.
This paper is structured as follows. Section 2 reviews related literature on rural–urban migration. Section 3 describes the data and presents the basic statistics. The empirical study is in Section 4. Conclusion and discussions are in Section 5.
Section snippets
Rural–urban migration and wage determinants: a literature review
Millions of people in the rural populations of the developing world confront the decision of migrating to urban areas and every year; many find it worthwhile to leave their villages for cities. The 2000 population census data show that 144.39 million rural residents in China, or 11.6% of the total population, moved into cities and towns (chengzhen), in 2000 (NBS, 2002).
The massive rural–urban migration since 1980 can be broadly attributed to the huge surplus of rural labor, widening income and
Description of the data and basic statistics
The data used in this study are from a survey conducted in Tianjin from October to December 2003. Tianjin, a coastal city located less than 100 miles southeast of Beijing, is one of the four central government municipalities (the other three being Beijing, Shanghai, and Chongqing). The metropolitan city had a total population of 9.35 million as of 2000.
Surveys were administered by the School of Business, Tianjin University of Finance and Economics, and distributed by students and instructors to
Wage determinants and discrimination: some empirical evidence
Using data from the above survey, this paper analyzes wage determinants for both migrant and urban workers. We expect that various factors–such as individual characteristics, education levels, and types of enterprises–would cause a wage gap between migrants and non-migrants.
Estimation is conducted using a semi-logarithmic wage equation with the natural logarithm of hourly wages as the dependent variable. This variable is used because most migrants tend to work more hours than city workers in
Discussion and conclusion
Rural–urban migration has become a socioeconomic phenomenon in China since the late 1980s. This study examines factors of rural–urban migration, migrant characteristics, and the determinants of wages. Since the late 1980s, the labor surplus, heavy tax burden, and loss of lands in rural areas, combined with higher income, more opportunities, and better education in cities, have driven farmers to leave their homelands for cities. Past institutions, especially the hukou system, however, make
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