“Agricultural to Non-agricultural” Ways and Chinese Labor Market Differentiation: Endowment Difference or Identity Discrimination?

Abstract

Abstract Different methods of transforming rural migrants’ household registration can affect their integration into citizenship. This study assesses the impact of different rural-to- urban hukou conversion methods on labor market wages and job entry, utilizing empirical analysis with China General Social Survey (CGSS) data. Rural migrants transitioning to urban hukou are categorized as active or passive “agricultural to non-agricultural” groups. Wage disparities between these groups are analyzed using the Oaxaca-Blinder decomposition method, revealing that 50% of the wage gap remains unexplained by individual characteristics. Additionally, this paper explores factors contributing to wage and job entry differences using OLS regression analysis. Empirical findings indicate that discrimination significantly contributes to the wage and job entry gap between passive and active groups, with primary mechanisms including statistical bias, information acquisition differences, and identity challenges. These results underscore the inevitable transition of the agricultural population to urban areas in emerging nations’ development trajectory. However, challenges may arise during this transformation, particularly in China, where passive “agricultural to non-agricultural” individuals face discrimination. Addressing the rights and interests of this group is crucial for ensuring smooth urbanization in China and offers insights to improve urbanization efforts in developing nations.