Network effects on labor contracts of internal migrants in China: a spatial autoregressive model

Badi H. Baltagi, Ying Deng, Xiangjun Ma

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

Abstract

This paper studies the fact that 37% of the internal migrants in China do not sign a labor contract with their employers, as revealed in a nationwide survey. These contract-free jobs pay lower hourly wages, require longer weekly work hours, and provide less insurance or on-the-job training than regular jobs with contracts. We find that the co-villager networks play an important role in a migrant’s decision on whether to accept such insecure and irregular jobs. By employing a comprehensive nationwide survey in 2011 in the spatial autoregressive logit model, we show that the common behavior of not signing contracts in the co-villager network increases the probability that a migrant accepts a contract-free job. We provide three possible explanations on how networks influence migrants’ contract decisions: job referral mechanism, limited information on contract benefits, and the “mini-labor union” formed among co-villagers, which substitutes for a formal contract. In the subsample analysis, we also find that the effects are larger for migrants whose jobs were introduced by their co-villagers, male migrants, migrants with rural Hukou, short-term migrants, and less educated migrants. The heterogeneous effects for migrants of different employer types, industries, and home provinces provide policy implications.

Original languageEnglish (US)
Pages (from-to)265-296
Number of pages32
JournalEmpirical Economics
Volume55
Issue number1
DOIs
StatePublished - Aug 1 2018

Keywords

  • Co-villager network
  • Contract
  • Internal migrants
  • Spatial autoregressive logit model

ASJC Scopus subject areas

  • Statistics and Probability
  • Mathematics (miscellaneous)
  • Social Sciences (miscellaneous)
  • Economics and Econometrics

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