Working Paper: NBER ID: w21675
Authors: Peter Kuhn; Kailing Shen
Abstract: We 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.
Keywords: migrant workers; hukou; employer preferences; labor market; China
JEL Codes: J71; O15; R23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| NLH workers (J89) | Callback rates (E43) |
| LH workers (J79) | Callback rates (E43) |
| Migrant productivity advantage (J61) | Callback rates (E43) |
| Effort of NLH workers (J89) | Callback rates (E43) |
| Payroll tax differentials (H29) | Callback rates (E43) |
| Application behavior of NLH workers (J29) | Callback rates (E43) |
| Selection biases (C52) | Callback rates (E43) |