Evolution of the Chinese rural-urban migrant labor market from 2002 to 2007

Abstract

Purpose – The purpose of this paper is to study the dynamic change of the migrant labor market in China from 2002 to 2007 using two comparable data sets. Design/methodology/approach – To understand the factors behind the wage change, the authors use the Oaxaca-Blinder decomposition (Oaxaca, 1973; Blinder, 1973) method to study the hourly wage change over this five-year period. Findings – The focus is on the rural-urban migration decision, the wage structure of migrants, the labor market segmentation between migrants and urban natives, and the changes of these aspects from 2002 to 2007. The paper finds that prior migration experience is a key factor for the migration decision of rural household members, and its importance keeps increasing from 2002 to 2007. The results show that there is a significant increase in wages among both migrants and urban natives over this five-year period, but migrants have enjoyed faster wage growth, and most of the increase of wages among migrants can be attributed to the increase of returns to their characteristics. The authors also find evidence suggesting convergence of urban labor markets for migrants and for urban natives during this five-year period. Research limitations/implications – In order to make the 2002 and 2007 data sets comparable, the authors had to restrict the observations with fixed residence only, and can only include seven cities. These limit the representativeness of the sample. When interpret the findings in this paper, it is important to keep this in mind. Originality/value – Due to the scarcity of data, there are few studies on the dynamics of the migrating population and the migrant labor market. Since the urban natives and migrants are still segmented in the labor market, the migrant labor market may have its own characteristics, and also, because of the increasing importance of the migrants in Chinese society, knowledge of the evolution of the migrant labor market is crucial for grasping the whole story behind the Chinese economic miracle.