Social-Family Network and Self-Employment: Evidence from Temporary Rural-Urban Migrants in China

Junfu Zhang and Zhong Zhao

No 5446, IZA Discussion Papers from Institute of Labor Economics (IZA)

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: rural-urban migrants; self-employment; social-family network (search for similar items in EconPapers)
JEL-codes: D85 J23 J61 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2011-01
New Economics Papers: this item is included in nep-cna, nep-dev, nep-ent, nep-mig, nep-net, nep-soc, nep-tra and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

Published - published in: IZA Journal of Labor & Development , 2015, 4:4

Downloads: (external link)
https://docs.iza.org/dp5446.pdf (application/pdf)

Related works:
Journal Article: Social-family network and self-employment: evidence from temporary rural–urban migrants in China (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp5446

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().