| By: |
Afridi, Farzana (Indian Statistical Institute);
Li, Sherry Xin (University of Texas at Dallas);
Ren, Yufei (Union College) |
| Abstract: |
We conduct an experimental study to investigate the causal impact of social
identity on individuals' response to economic incentives. We focus on China's
household registration (hukou) system which favors urban residents and
discriminates against rural residents in resource allocation. Our results
indicate that making individuals' hukou status salient and public
significantly reduces the performance of rural migrant students on an
incentivized cognitive task by 10 percent, which leads to a significant
leftward shift of their earnings distribution. The results demonstrate the
impact of institutionally imposed social identity on individuals' intrinsic
response to incentives, and consequently on widening income inequality. |
| Keywords: |
social identity, inequality, field experiment, hukou, China |
| JEL: |
C93 D03 O15 P36 |
| Date: |
2012–03 |
| URL: |
http://d.repec.org/n?u=RePEc:iza:izadps:dp6417&r=cna |