Job prospects and labour mobility in China

Abstract

China's structural changes have brought new challenges to its regional employment structures, entailing labour redistribution. Until now, Chinese migration research with a forward-looking perspective and on bilateral longitudinal determinants at the prefecture city level is almost non-existent. This paper investigates the effects of job prospects on individual migration decisions across prefecture boundaries. To this end, we created proxy variables for wage and employment prospects, introduced reference-dependence to a dynamic discrete choice model, and estimated corresponding empirical specifications with a unique quasi-panel of 66,427 individuals from 283 cities during 1997–2017. To address multilateral resistance to migration resulting from the future attractiveness, we exploited various monadic and dyadic fixed effects. 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 employment 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.