The Impact of Internal Migration on Wages in China
Date Issued
2012
Date
2012
Author(s)
Sandberg, Victor
Abstract
Increased migration during the last decades in China is widely recognized as having played an important role in the country’s astonishing economic development. Without casting shadows over these achievements, one interesting question that arises is whether this development has been equally beneficial to all members of the society. The typical migrant job has been relatively low-skilled. Thus, migrants should compete with local low-skilled labor market participants to a higher degree than with more educated local labor market participants.
This paper compares the effect of migration on wages of non-skilled and skilled individuals. It employs regression analysis using individual level data from the China Health and Nutrition Survey, and provincial level data from the China statistical yearbooks and China Censuses. To deal with potential endogeneity of migration, I employ an instrumental variable method. The instrument that is used is occurrence of disasters. After dealing with the endogeneity problem of migration, I find some evidence that non-skilled individuals benefitted less than other individuals from incoming migration. They were not however, absolutely adversely affected. That is, less-skilled individuals benefitted from migration, but less than other individuals within their province.
These findings give some support to the hypothesis that incoming migration to a labor market should increase the relative income of complements while decrease the relative income of substitutes. In the case of China, it suggests that increased migration in the country has not been equally beneficial to all members of the society.
Subjects
Migration
Wages
Native labor market outcomes
China
Instrumental Variable method
Type
thesis
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