Job Prospects and Labour Mobility in China

TL;DR

This study analyzes how sector-based job prospects influence individual migration decisions across Chinese cities, revealing that better prospects significantly increase migration likelihood and are affected by family networks and individual characteristics.

Contribution

It introduces a proxy for job prospects, applies a micro-founded migration model with fixed effects, and provides empirical evidence on migration determinants in China from 1997 to 2017.

Findings

A 10% increase in job prospects ratio raises migration probability by 1.28-2.19 percentage points.

Family migration networks increase migration likelihood by about 6 percentage points.

Labour migrants tend to be male, unmarried, younger, and more educated.

Abstract

China's structural changes have brought new challenges to its regional employment structures, entailing labour redistribution. By now Chinese research on migration decisions with a forward-looking stand and on bilateral longitudinal determinants at the prefecture city level is almost non-existent. This paper investigates the effects of sector-based job prospects on individual migration decisions across prefecture boundaries. To this end, we created a proxy variable for job prospects, compiled a unique quasi-panel of 66,427 individuals from 283 cities during 1997--2017, introduced reference-dependence to the random utility maximisation model of migration in a sequential setting, derived empirical specifications with theoretical micro-foundations, and applied various monadic and dyadic fixed effects to address multilateral resistance to migration. Multilevel logit models and two-step system GMM estimation were adopted for the robustness check. Our primary findings are that a 10% increase in the ratio of sector-based job prospects in cities of destination to cities of origin raises the probability of migration by 1.281--2.185 percentage points, and the effects tend to be stronger when the scale of the ratio is larger. Having a family migration network causes an increase of approximately 6 percentage points in migratory probabilities. Further, labour migrants are more likely to be male, unmarried, younger, or more educated. Our results suggest that the ongoing industrial reform in China influences labour mobility between cities, providing important insights for regional policymakers to prevent brain drain and to attract relevant talent.