Topic:

Migration Restrictions and the Migrant-Native Wage Gap: The Role of Wage Setting and Sorting

Abstract:

This study examines the factors contributing to the wage gap between migrants and natives, as well as the influence of internal mobility constraints on this gap. Using matched employer-employee panel data from a Chinese metropolis, we estimate a two-way fixed effect wage model and decompose the wage gap into differences in skills, wage setting, and sorting between migrants and natives. The decomposition analysis reveals that, despite migrants having higher skills than natives, they earn lower wages within the same employer and are less likely to be employed by companies offering high wage premiums. These two factors account for a 10 percentage-point wage penalty for migrants with comparative skills. Additionally we investigate the impact of a policy change that restricted the "hukou" (household registration) quota to understand the mechanisms underlying the firm-specific pay premiums for natives. Following a one-third reduction in hukou quotas wages of migrants increased relative to those of native workers particularly in the private sector where significant quota reductions occurred, and among young and high -skilled migrants who have a higher demand for hukou. This effect is mainly driven by an increase in the wage premium paid by employers due to the unavailability of hukou. However, the tightening of the hukou quota exacerbates the misallocation of workers, making high ability migrants more likely to work in low-productivity public sectors.

Lecturer:

Naijia Guo is an assistant professor at the University of Hong Kong (HKU) and associate editor of the Journal of Economic Behaviors & Organization, a top journal of behavioral economics. His main research interests are labor economics and family economics, such as education, migration, unemployment and intra-family decision-making.

Time: April 12 , 2024 15:30-17:00

Venue: B321,Zhixin Building,Central Campus