Migration and labor-market returns in urban China: results from a recent survey in Guangzhou{

The transitional process in China is marked by prominent roles of state institutions, which are a key determinant of the opportunity and reward structure in the newly developing labor market. Migrant labor and the occupational and sectoral changes in the urban economy have further shaped the evolution of the labor market in Chinese cities. In this paper, I argue that labor-market returns are not only functions of human capital but are heavily influenced by state-controlled institutional status. Specifically, I examine the variations in income and benefits returns among nonmigrant urban residents, permanent migrants who possess urban residence, and temporary migrants who are denied permanent residence rights in cities. The empirical analysis employs data from a recent survey conducted in Guangzhou, one of the largest and most rapidly changing cities and one of the most popular destinations of migrant workers in China. The findings show that permanent migrants' income returns are especially high and that temporary migrants' benefits returns are especially inferior. Furthermore, they suggest that permanent migrants' advantaged positions are conducive to their continued success in the labor market when they shift to more profitable occupations and sectors such as commerce and self-employment. The findings of this paper support the notion that in China resident status functions like ascribed attributes that have effects on labor-market returns independent of achieved attributes, and that migration and labor-market segmentation are intricately related to the reward structure in the urban labor market. DOI:10.1068/a33150 {Earlier versions of this paper were presented at the International Workshop on Resource Management, Urbanization and Governance in Hong Kong and Zhujiang Delta, Chinese University of Hong Kong, 23 ^ 24 May 2000 and at the Pacific RimWorkshop, Lewis Center for Regional Policy Studies, UCLA, 3 ^ 4 August 2000. nonmigrants, permanent migrants, and temporary migrantsöand seek to evaluate the factors that contribute to variations of these returns. The empirical analysis in this paper employs data from a recent survey conducted in the city of Guangzhou in Guangdong province, one of the largest and most rapidly changing cities in China. In the next section of the paper, I explain the importance of employing both income and benefits as measures of labor-market returns in China, and summarize the most popular determinants of labor-market returns and how they differ between Western countries and China. Then, I examine the intricate relations among migration, the household registration system, and labor-market segmentation and returns in urban China. This is followed by a detailed account of the Guangzhou survey. The empirical analysis consists of three parts. The first part documents income returns and their determinants; the second part examines benefits returns and their determinants; and the third part analyzes occupational and sectoral allocations and mobility of labor in relation to income and benefits returns. In the last section, I summarize the findings of the paper and highlight the importance of resident status as a divide in China's urban labor market. Labor-market returns in Western countries and in China Measurement of labor-market returns In most Western capitalist economies, the labor market is developed and its operation is governed by market mechanisms. Most crucial among these mechanisms are free labor flows and the allocation of labor by demand and supply. In addition, labormarket returns are primarily measured in terms of income (table 1). Most studies on labor markets in the West use wages or earnings as the sole indicator of labor-market returns (for example, Barrett et al, 1999; Grubb, 1997; Kane and Rouse, 1995; Leigh and Gill, 1997), based on the premise that income reflects demand in the labor market and individuals' skills. Though many jobs offer benefits such as health insurance and retirement plans, they are usually a function of employer policy and are less sensitive to labor demand and skills. To corporate executives, bonuses and other benefits may constitute attractive components of their compensation packages. In general, however, benefits are less useful measures of labor-market returns in Western economies, where it is assumed that individuals' salary and other monetary remuneration can be used to purchase all kinds of goods and services that satisfy their needs. In addition, the government in capitalist economies upholds mechanisms that facilitate market operation but is not expected to monitor labor allocation or the ways labor is compensated. Table 1. Comparison of urban labor-market returns between Western countries and China. Western capitalist economies China