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on China |
| By: | Zhang, Junfu (Clark University); Zhao, Zhong (Renmin University of China) |
| Abstract: | We hypothesize that individuals with a larger social-family network are more likely to choose self-employment. We test this hypothesis using data on temporary rural-urban migrants in China. The size of a migrant’s social-family network is measured by the number of relatives and friends this migrant greeted during the past Spring Festival. Our empirical analysis faces two challenges. First, there is an endogeneity problem in that a migrant may want to develop and maintain a large social-family network exactly because he is self-employed. For this reason, a simple correlation between the probability of being self-employed and the size of the migrant’s social-family network cannot be interpreted as causal. Second, the size of the social-family network is measured using survey data, which is subject to measurement error. To overcome these problems, we take an instrumental variable (IV) approach. More specifically, we examine the distance an individual migrated when he first moved to a city and use this variable to instrument for the current size of the social-family network. We establish the credibility of the IV by emphasizing the unique institutional context of rural-urban migration in China and focusing on the sample of migrants who originally started as wage workers in urban areas and currently are not in their first jobs. Our IV results indeed show that a rural-urban migrant with a larger social-family network is more likely to be self-employed in the city. This finding is robust to alternative model specifications and various restrictions on the sample used in estimation. |
| Keywords: | social-family network, self-employment, rural-urban migrants |
| JEL: | J23 J61 D85 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5446&r=cna |
| By: | Karpestam, Peter (Department of Economics, Lund University) |
| Abstract: | Residents in rural China doubt the benefits from education, yet there is empirical evidence supporting positive effects in urban and rural areas. This paper investigates whether education affects a variety of income attainment indicators for households in rural China, using a household survey from the provinces of Hebei and Liaoning. The analysis estimates education effects for household residents, but also for temporary migrants (rural-urban migrants) and children who have moved permanently (rural-rural migrants). This can help to answer a set of three related questions: 1) Does household welfare in rural China depend on education? 2) Is the effect of education contingent on the decision to migrate? and 3) Does education have dissimilar effect for rural-urban and rural-rural migrants? The results support that education has positive income effects and that migration yields no additional payoffs. However, there is no evidence that households benefit from higher education if migration is only temporary. Altogether, this signals positive payoffs of educational expenses to rural households but households which consider sending a migrant into the urban labor force are better off if the more educated stay at home. |
| Keywords: | East Asia; China; Education; Migration; Remittances; Non-Farm Incomes; |
| JEL: | D13 F24 I20 J60 R23 |
| Date: | 2011–01–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lunewp:2011_002&r=cna |