Do internal migrants crowd out employment opportunities for urban locals in China?—Reexamining under the skill stratification

Abstract

The relationship between internal migrants and local workers in urban labor market is the particularity of the transformation and development of China’s labor market. The analysis of which is helpful to accurately grasp the current situation and future of labor market. Based on the micro data of the fifth and sixth National Census and 1% National Sample Survey in 2005, this paper empirically tests the net effect and its heterogeneity characteristics of internal migrants on the employment of urban local workers. The results show that the effect of migrants on local workers’ employment is not a complete substitution effect, but there is a complementary effect on the employment of local workers. Specifically, the employment substitution effect is only manifested in low-skilled local workers, while the complementary effect is manifested in medium-skilled and high-skilled local workers. The micro mechanism of employment complementary effect can be explained by scale economy, skills complementarity, externalities of consumption and human capital. In addition, the impact of migrants on the employment of local workers depends significantly on the degree of division of the labor market that still exists. The reform of labor marketization and the mode of resource allocation guided by marketization are beneficial to balance urban and rural labor resources, promote skills complementarity and division between migrants and local workers, and finally realize a good situation of mutual benefit and win–win situation.