Scandinavian Working Papers in Economics

Stockholm School of Economics Asia Working Paper Series,
Stockholm School of Economics, Stockholm China Economic Research Institute

No 2014-31: Self-employment Choices of Rural Migrants in China: Distance and Social Network

Yexin Zhou (), Mo Chen and Jingyi Ye
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Yexin Zhou: Stockholm China Economic Research Institute

Abstract: In Chinese cities, rural migrants on average are less educated and poorer than the urban locals. Migration is costly, especially for those who choose to move to provinces faraway from their hometowns. A larger fraction of the rural migrants are self-employed than that of the urban locals. The social contacts of migrants in the host cities often help them to find jobs or to start businesses. We studied the choice of self-employment of rural migrants in Beijing, using a migrant dataset collected from 2007 to 2012. The result shows that the self-employed rural migrants in Beijing tend to be females, migrating from faraway provinces, with more social contacts, and either having the highest education or the lowest. Education and social capital are positively correlated with earning for both wage-earners and self-employed, with different magnitudes. We use a search model to explain this.

Keywords: Self-employmen; Rural Migrants; Social Network

JEL-codes: J61; R23; Z13

24 pages, August 20, 2014

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