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Network Effects on Labor Contracts of Internal Migrants in China: A Spatial Autoregressive Model

Badi Baltagi (), Ying Deng () and Xiangjun Ma ()
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Ying Deng: School of International Trade and Economics, Beijing
Xiangjun Ma: School of International Trade and Economics, Beijing

No 10926, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper studies the fact that 37 percent 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 sub-sample 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.

Keywords: contract; co-villager network; spatial autoregressive logit model; internal migrants (search for similar items in EconPapers)
JEL-codes: O15 R12 J41 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2017-07
New Economics Papers: this item is included in nep-cna, nep-geo, nep-lma, nep-mig, nep-net and nep-tra
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Published in: Empirical Economics 2018, 55 (1), 265-296

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Related works:
Journal Article: Network effects on labor contracts of internal migrants in China: a spatial autoregressive model (2018) Downloads
Working Paper: Network Effects on LaborContracts of Internal Migrants in China- A Spatial Autoregressive Model (2017) Downloads
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