The impact of labor mobility with fellow townsmen on the wages of rural migrants: evidence from China

Abstract

AbstractLabor mobility is an inherent component of economic development and labor market changes. With globalization and urbanization, labor mobility is on the rise in many developing countries, and it is of great significance to study the economic outcomes and poverty alleviation effects of this phenomenon. This paper explores the impact of labor mobility on the wages of rural migrants when they move out with their fellow townsmen (folks from the same county). The study uses the China Migrants Dynamic Survey (CMDS) data and applies the Propensity Score Matching (PSM) method for empirical analysis. Our results suggest that labor mobility with fellow townsmen significantly increases the wages of rural migrants. The paper shows two promotion mechanisms: mobility with fellow townsmen affects the wages of rural migrants by improving their ability to search for information and negotiate wages. Heterogeneity analysis indicates that mobility with fellow townsmen significantly increases the wages of rural migrants engaged in producer service, consumer service, blue-collar occupations, and working in state-owned and private enterprises. Furthermore, it has a more positive impact on the wages of older rural migrants from an intergenerational perspective. Interestingly, rural migrants may “give up” part of their wages to care for their families when they move with their spouses, parents, or children. Therefore, the government needs to take effective policy measures to promote the employment service system and improve the labor rights and interests protection mechanism for rural migrants.