Hukou's impact on labor occupation segmentation

Abstract

Purpose

The purpose of this paper is to take occupation opportunity as an indicator to examine the impact of hukou on labor market segmentation in China. It estimates the scale of the impact and identifies the way of the impact. Especially, the paper takes hukou uniform reform as an example and tests whether hukou reforms helped in eliminating labor market segmentation.

Design/methodology/approach

The data sets this paper adopted are the 2000 Census and 2005 Mini Census data in China. Linear model and Probit model are used in estimating hukou's impact. Oaxaca/Blinder decomposition is used in decomposing the difference in occupation distribution among hukou statuses. DID evaluation method is used in comparing the region with hukou uniform reform and the region without to capture the influence of the reform.

Findings

The result shows that occupation segmentation based on hukou significantly exists in urban labor market. Hukou uniform reform improved the occupation opportunity of local rural workers but migrating rural workers were somehow crowded out. Migrating urban workers did not benefit from the reform. To conclude these, the reform released employment segmentation between rural and urban workers within the reformed region but strengthened the segmentation between the local residents and outcomers which could influence future labor source and scale in reformed area.

Originality/value

The paper evaluates the hukou uniform reform's impact on the labor market using an empirical way for the first time and makes concrete policy recommendations based on these findings.

Citation

Song, J. and Li, S. (2014), "Hukou's impact on labor occupation segmentation", China Agricultural Economic Review, Vol. 6 No. 3, pp. 506-522. https://doi.org/10.1108/CAER-05-2013-0081