Do employers prefer migrant workers? Evidence from a Chinese job board

Peter Kuhn,Kailing Shen

doi:10.1186/s40172-015-0038-0

Abstract

AbstractWe study urban, private sector Chinese employers’ preferences between workers with and without a local permanent residence permit (hukou) using callback information from an Internet job board. We find that these employers prefer migrant workers to locals who are identically matched to the job’s requirements; these preferences are strongest in jobs requiring lower levels of education and offering low pay. While migrant-native payroll tax differentials might account for some of this gap, we argue that the patterns are hard to explain without some role for a migrant productivity advantage in less skilled jobs. Possible sources of this advantage include positive selection of nonlocals into migration, negative selection of local workers into formal search for unskilled private sector jobs, efficiency wage effects related to unskilled migrants’ limited access to the urban social safety net, and intertemporal labor and effort substitution by temporary migrants that makes them more desirable workers.Jel codes:O15, R23

Highlights

A common claim in popular discussions of migration is that employers prefer to hire workers with limited residency rights—such as temporary or undocumented migrants—over qualified natives, because these migrant workers are willing to work harder, for longer hours, or for less pay
This paper uses internal data from XMRC, an Internet job board in Xiamen, a medium-sized, prosperous Chinese city, to pose the following question: among qualified local hukou (LH, or ‘native’) and non-local hukou (NLH, or ‘migrant’) candidates who have applied for the same job, which applicants are more likely to receive an employer contact? Our main finding is that employers on this job board, which caters to privatesector firms seeking relatively skilled workers, prefer workers without a permanent residence permit over -matched permanent residents; there is a difference in callback rates to the same job of about 0.8 percentage points, or 11 percent
Where qij is the firm’s expectation of worker i’s productivity in job j based on the contents of the resume, wij is the wage the firm expects to pay to worker i in job j, ti is the employer portion of the payroll tax for that worker, d measures employers’ net distaste for migrants, Mi is an indicator for migrant status (NLH), θj is an ad-specific expected-quality threshold for contacting a worker, b > 0 is a scaling parameter, and eij is an iid error term

Summary

Introduction

A common claim in popular discussions of migration is that employers prefer to hire workers with limited residency rights—such as temporary or undocumented migrants—over qualified natives, because these migrant workers are willing to work harder, for longer hours, or for less pay. Our main finding is that employers on this job board, which caters to privatesector firms seeking relatively skilled workers, prefer workers without a permanent residence permit over -matched permanent residents; there is a difference in callback rates to the same job of about 0.8 percentage points, or 11 percent This gap is considerably larger in jobs requiring lower levels of education and in jobs offering lower wages. Consistent with the notion that NLH workers face barriers to public sector employment, only 22 percent of employed migrants in China’s major cities work in the broader public sector (government plus State-Owned Enterprises (SOEs)), compared to 62 percent of employed urban natives. This tendency for urban natives to cluster in public sector jobs—which is more muted but still very substantial in Xiamen—provides an important context for our results in this paper, which apply to private sector employers only

Data and methods

Results

By Job’s Posted Wage

Conclusion

All working-age persons