７
８【論文】

Economic Transition and Self-employmentof Migrants in Urban China
Xinxin MA・Quheng DENG＊［キーワード］migrants, self‑employment, economic transition, business creation, urban China［JEL 分類番号］J23, J31, O17

1. Introduction

Hanley 2000; Catherine, Gang and Yun 2005;
Dimova and Gang 2007; Jackson and Mach

Transition economists view the rise of self‑2009). Along with the economic transition in

employment a sign of the growing importanceurban China, the number of self‑employedof markets relative to the state (Hanley, 2000;

workers1 increased from 150,000 in 1978 to───────────＊ This research was supported by the project
grand of Joint Usage and Research Center
Program at the Institute of Economic Reserch,
Hitotsubashi University, Grant‑in‑Aid for Scientific Research (KAKENHI) of JSPS (Japan
Society for the Promotion Science (No. 25380297,
and No. 16k03611), and Natiomal Science
Foundation of China (No. 7103105). We are
grateful to professor Li Shi (Beijing Normal
University), for providing the CHIP 2007 data.
We would like to thank professor Emiiko Usui
(Hitotsubashi University), professor Katsuji
Nakagane (Tokyo University), professor Kai
Kajitani (Kobe University), professor Yanrui Wu(The University of Western Australia) for theirhelpful comments in the 2015 6th Biennial
International Conference on Transition andEconomic Development (TED) in Fudan
University, the 2013 annual meeting of Japanese
Economic Association and the 2013 annual
meeting of Japanese Chinese Economics andManagement Studies Associa-tion. This paper isan empirical study which one of objectives is toanswer the comment on
How did the wage
differentials between public and provide sectors
affect the choices of employ-ment status? in the2015 6th Biennial Inter-national Conference on
Transition and Economic Development (TED).

21.36 million in 2000, and then to 52.27 million
in 2011 (NBS, 2012).
Why was there a large change in the size ofthe self‑employed sector in urban China
during the economic transition period? There
are two primary possible explanations. The
first is the great increase in the number of
migrants along with economic development
and the deregulation of the registration systemafter the 1980s. The second explanation is thatalong with the transition from a planned to amarket economy, the government enforced
ownership reform of state‑owned enterprises(SOEs) from the 1980s onward. A section of
employees with urban registration in the SOEs
───────────
１

There is no unified definition of self‑employedworkers in previous studies in China. Based on
the survey data used in the paper and firmclassification rules published by Chinese government, we defined self‑employed workers as
those who work in a small firm with less thaneight employees or who work in a firm made up
entirely of the self‑employed worker and unpaid
family members.

Economic Transition and Self‑employment of Migrants in Urban China

７９

became laid‑off workers and some of them are

Conversely, self‑employed workers may also

re‑employed in the informal sector (e.g.,

be successful business owners who create new

becoming self‑employed workers). In addition,business opportunities and many innovative

a section of workers voluntarily left SOEs to

new products ( business creation hypothesis ).

become owners in the private sector. ThisAs a result, a high percentage of self-

paper discusses the determining factors for theemployed workers may reflect an environment

self‑employment of migrants in urban China2.

that encourages risk‑taking, business creation,

There are two hypotheses about self‑

and market development ( business creation

employment discussed in previous studies.

hypothesis ) , or it may be a result of the lackOne

unemployment

of jobs in the formal sector in which wages arehypothesis, which is indicated in the dualism

set just above the market‑clearing level

theory of Todarro (1969) and Harris and( disguised unemployment hypothesis ).

isTodarrothe(1970)3.

disguised

Migrants to the informal

Whichhypothesis

canexplainself‑

sector can be explained by this hypothesis.

employment of migrants in urban China? In

Self‑employment may result from forced

this paper, we provide some evidence torecourse to the informal sector, in which theanswer this question. In the previous empiricalindividual s activities and wage slightly differ

studies on this issue, although Earle andfrom what they would be if they were

Sakova (2000), Hanley (2000) and Dimova andunemployed. It is thought that self‑employedGang (2007) utilized microdata of Central andworkers barely make a living from working,Eastern

receiving lower wages and working longer

countries to test these two hypotheses, Ma

hours

sector.

(2016a) test these two hypothesis for the local───────────
２ For the latest empirical study on determinants of self‑employment of local urban residents
please see Ma (2016a).
３ According to the dualism theory in development economics, in the prior period of economic
development, there exist surplus labors in
traditional sector (e.g., agriculture sector), whenmodern sector (e.g., manufacture sector) offer
wage closed or a little more than subsistence
wage level, migration from the rural region to
the urban region will occur until the economy
pass the Lewis s turning point (Lewis, 1954).
Todarro (1969), Harris and Todarro (1970)
developed Lewis model and pointed out that
migrants expect the high wage of modern sectorin urban market, so when he doesn t find the jobin the formal sector immediately, he always
worked in the informal sector (such as self‑
employed sector) to wait (or do a job search) for
the formal sector job. ILO (1972) indicated thatworking in the informal sector also cancontribute economic development for developing
countries.

urban residents in China, there has not been an

than

those

in

the

formalEuropeaneconomictransition

empirical study for migrants in urban China.
One of the purposes of this paper is to resolve
this dearth.
This paper is structured as follows. Part II
reviews the literature, and Part III describes
estimation methods, including introduction to
the microdata and models. Part IV states
descriptive statistics and estimated results,
and Part V presents the main conclusions.

2. Literature Review
First,

forthedeterminants

of

self‑

employment, it is indicated that individual
attributes should affect the choice to become aself‑employed worker. For example, gender,
human capital, and family background areoften used as control variables in previous
studies (e.g., Amit et al., 1990; Evans and８０

中国経済研究第１３巻第１号

Leighton, 1989; Yamada, 1996; Bruce, 1999;

responded to new market opportunities, andHamilton, 2000; Dunn and Holtz‑Eakin, 2000;

found that both education and cadre status

Zhang and Pan, 2012). In addition, Evans anddeter people from entry into self‑employment

Jovanovic (1989), Lentz and Laband (1990),

in urban areas but not in rural areas.

Holtz‑Eakin et al. (1994), Dunn and Holtz‑

Regarding the determinants of the self‑

Eakin (2000) indicated that liquidity constraints

employment in economic transition countries,

also affect the entry to the self‑employed.

Earle and Sakova (2000), Hanley (2000) and

Reviewing empirical studies on the determi-

Dimova and Gang (2007) pointed out the twonants of self‑employment in China beyond theprevious hypotheses ( disguised unemployment

factors of human capital, family background,

hypothesis and business creation hypothesis )and liquidity constraints, the effects of party

and tested them for Central and Eastern

membership and social capital are also pointed

European transition countries. Earle andout (Wu 2006; Yueh 2009a, 2009b; Zhang and

Sakova (2000) showed that for both own‑

Zhao 2015, Ma 2016a). For examples, Yueh

account workers and self‑employed employers(2009a) examined three tranches of the self‑

in almost every country (Bulgary, Czech

employed in urban China (i. those who are self‑

Republic,

employed only, ii. those who are self‑employed

Slovakia), the probabilities are estimated to be

as a second job, and iii. a sub‑sample who havenegatively affected by wage differentials

experienced unemployment and then became

between own-account workers and employees

self‑employed), and found that social networks

and positively affected by wage differentials

Hungary,

Poland,Russiaandsignificantly predict self‑employment except

between the self‑employed employer andfor those who are working for themselves as aemployees. This corroborated the disguised

second job. Yueh (2009b) estimated theunemployment hypothesis. Hanley (2000) also

determinants of the self‑employed, and pointed

tested these hypotheses to estimate wage

out that fewer are communist party members

differentials between self‑employed employers,

and more have experienced unemployment,

own-account workers, and employees, pointing

however,more

out that the disguised unemployment hypothe-

educated and older workers are less likely towomen,

party

members,

sis is supported by the observations for the

become entrepreneurs, and social networks,

Czech Republic, Poland, and Slovakia. Ma

motivation and drive, and attitudes toward(2016a) revealed that compared with emplo-

risk, are all significant factors associated withyees, self‑employed employment or own‑

entrepreneurship. Zhang and Zhao (2015)

account worker is seemingly not a better

tested the hypothesis that individuals with achoice for local urban residents‑being self‑larger social‑family network are more likely toemployed is similar to disguised unemployment

choose self‑employment for temporary rural‑in urban China.

urban migrants, and they found that the

In comparison with these previous studies,

estimation results support the hypothesis.

the main features of this paper are the

Otherwise, Wu (2006) examined the patterns offollowing.

entry into self‑employment in urban and ruralFirst, we utilized the model of Earle andChina and across different reform stages,

Sakova (2000) to verify the business creation

focusing on how communist cadres haveand disguised unemployment hypotheses forEconomic Transition and Self‑employment of Migrants in Urban China

migrants in China. To the author s knowledge,

８１(self‑employed employer, own‑account worker,

this paper is the first study to test these

employee, and the unemployed). Here, referring

hypotheses for migrants in China, and these

Earle and Sakova (2000), Hanley (2000) andresults can be compared with estimatedDimova and Gang (2007), we defined own‑

results of other transition

countries4

and Ma(2016a) for local urban residents in China.
Second, although Earle and Sakova (2000)

account workers are those who work in small
firms which only him him(her)self or no‑paidfamilyworkersworkin,self‑employed

used wage differentials among self‑employedemployees are those who work in small firms

employer, own‑account worker, and employee,with workers less than 8 and they are theemployee wages between the public andowners of these small firms. The reference

private sectors were not distinguished. The

category is the employee group.

most remarkable feature in Chinese urban(1)labor market is that the labor market issegmented by these two sectors, so it isnecessary to test the two hypotheses including

In Eq.(1),denotes workers,

wage differentials between the public anddenotes employment status as the above.

private sectors5. It is thought that theindicates probability of one kind of

expected wage of self‑employed workers in

employment status,

are factors affecting thethe formal sector is close to the wage level

employment status probability,

achievable in the private sector, but this is not

estimated coefficients, andare theis a constant.

the case for public sector. We also calculate

Then we used two kinds of methods to test

wage levels in the private sector to perform athe disguised unemployment hypothesis androbust check of hypothesis tests.

business creation hypothesis . The one is a

3. Methodology and Data
3.1 Models

comparison of average wage levels of self‑
employed

employergroup,

own‑accountworker group and employee group (HanleyFirstly, to explicate the determinants of the2000). For example, holding the other factors

self‑employed in urban China, the employment(such as human capitals) constant, if thestatus probability function is estimated using aaverage wage level of own‑account worker

multinomial logit model, which is represents ingroup is lower greatly than employee group, it

Eq. (1). The dependent variable takes on one

shows that own-account workers are nearlyvalue for four categories of employment status

the disguised unemployed, and labor market is───────────
４ For the hypothesis test on n Bulgary, Czech
Republic, Hungary, Poland, Russia and Slovakia,
please see Earlｅ and Sakova (2000).
５ For empirical studies on labor market
segmentation by public and private sector in
urban China, please see Dong and Bowels (2002),
Xing (2006), Yin and Gan (2009), Lu, et al. (2012) ,Chen, et al. (2005), Zhang and Xue (2008), Ye, etal. (2011), Demurger, et al. (2012) , Lu (2012), andMa (2009, 2014, 2016b).

segmented.
The other test is the estimation of theeffects of wage premiums on the probability of
employment status (Earle and Sakova 2000). In
order to gain these imputed wages, wage
functions by different employment statusgroups are estimated. Here, Maddla (1983)
model is used to deal with the sample selection
bias problem, which has been shown in Eqs.

８２

中国経済研究(2.1)〜(2.3).

example, the probability to become a self‑

Wage functions estimated by OLS model is

employed employer is expressed as,

and the other probability (such as employee,

expressed as Eq. (2.1).
(2.1)
In Eq.(2.1),

第１３巻第１号

own‑account worker, the unemplo-yed) is.

expressed as

are factors identicalto those expressed in Eqs. (2.1),

denotes workers, andis used as anindicates the dependent variable (as theidentification variable6. Using the estimatedlogarithm of wage rate).

is an index

results of the distribution function and theindicating employment status (self‑employeddensity function by Eq.(2.2), selectivity items

employer, own‑account worker and employee),(

are factors affecting wages.

andthe estimated coefficients. Further,
constant and)arecalculated.

The

are

corrected wage functions expressed by Eq.

is a(2.3) can be estimated using these selectivity
items.

is the error term.

Considering the selection bias problem inEq.(2.1), the selection bias corrected wage
function model is proposed (Maddala 1983).
Eq.(2.2) expresses the probability of employment status using multinomial logit model. For───────────
６ Child, household income, family background,social capitals are used as identification
variables in this paper.

(2.2)
(2.3)
) are added as

hypothesis is supported. While, when the

new variables, the other variables are similar

In Eq.(3), wage premiums (estimated results of wage premium ( Wer/with Eq(1). It is thought that higher theWee ) is negative significantly (or insignifi-

wage premium, higher the probability tocantly) on the probability to becomed self‑

choice the employment status. When theemployed employer, it is shown that althoughestimated results of wage premium ( Wer/

becoming a self‑employed employer can t gainWee ) is positive significantly on the proba-

more, he (she) has to choice to become a self‑bility to become a self‑employed employer, it

employed employer, it indicates that the entry

is shown that the self‑employment is a new

to the informal sector may be an involuntarybusiness to gain more income and create more

behavior, and disguised unemployment hypo-values (such as create new jobs for others, andthesis is supported.

newgoods),

sothebusinesscreation(3)Economic Transition and Self‑employment of Migrants in Urban China

3.2 Data

８３

From the above, the dependent variable is

The 2007 Chinese Household Income Project

an employment status category variable. The

Surveys data (CHIP2007) are used for the

independent variables are as follows (Table 1

analysis. The survey was conducted by NBS

shows(National Bureau of Statistics) and Beijing

employment status groups).

samplestatisticaldescriptions

byNormal University in December 2008 includingFirst, we utilized some variables used in

respective information about employment

previous studies. These include individual

status and wages of migrants. The survey

variables likely to affect employment status

covered the represented districts in China,

choice, such as schooling years, tenure years,

including Beijing, Shanxi, Liaoning, Jiangsu,

health status (very good, good, normal, bad)Anhui, Guangdong, Henan, Hubei, Sichuan,

dummy variables, which are the index of

Yunnan, and Gansu.

human capital, female (female is a binary

Table 1 Statistical descriptions of migrants

Age
Schooling years
Health status
Very good
Good
Fair
Bad
FemaleHan race
MarriedChild
Living with parents
Household income

Employee
Mean
S.D.
30
9
9
2

Employer
Mean
S.D.
34
8
9
2

Own‑account
Mean
S.D.
36
9
8
2

0.44710.40540.13570.01180.64810.97940.00820.21330.27739.93500.49730.4911
0.34260.10780.47770.14200.09030.40970.44780.59950.39420.48910.10220.0146
0.61310.98540.00730.07300.24829.87220.49050.50170.30400.12040.48880.12040.08540.26110.43350.60600.40580.39670.17570.02170.63410.98730.01090.05620.22839.95480.49150.48970.38090.14600.48210.11200.10380.23040.42010.6060Father: senior high school and over

0.12570.3316

0.06570.2487

0.09420.2924

Father: manager
Hukou change methods
Relations

0.04050.000634

0.19730.024254

0.04380360.2054
0
59

0
0
33

0
0
130

0.59050.34200.0676

0.49190.47450.25110.60580.32120.07300.49050.4686
0.2611

0.55800.35330.08880.49710.47840.28470.60520.15390.24091702

0.48900.36100.42780.35770.07300.5693137

0.48110.26110.49700.25000.13590.6141552

0.43340.34300.4872

The frequency of contact to relations
One time weekly
One time monthly
One time yearly
Regions
East
West
Central
Number of observations
Source : Calculated using CHIP2007.

８４

中国経済研究第１３巻第１号

variable coded 1 if the respondent is a female

with higher skill levels, enlistment in the army,

and 0 otherwise), and Han race (Han race is aand purchase of a commercial house (invest-

binary variable code 1 if the respondent is Han

ment in housing) in the urban area. It is

race, and 0 minority). In addition, it is thought

thought that registration change may influence

the risk aversion preferences vary with these

the choice of employment status, so we add a

individual attributes, and the risk aversion

registration change method dummy (a binary

preference becomes more likely with increa-

variable coded 1 if the worker experienced asing age.

registration

changebypurchaseofaSome previous studies indicate that family

comnerica house in the urban area and 0

factors, such as child, marriage status, parent

otherwise). In addition, because there are

education, and parent occupations, can affectregional disparities in China, it is thought thatthe choice to become a self‑employed worker,

labor demands vary by region, so we add threeparticularly for female workers. We used aregional dummies (West, East, and Central

marriage dummy, number of children, father

regions).

education (a senior high school and over

In order to test the hypothesis, wage7

dummy), and father occupation (manager

differentials

dummy) to control the influence of thesegroups are calculated─the wage differential

factors.

between own‑account worker and employee

betweenemployment

statusAs indicated in the liquidity constraint(Woa/Wee) and that between self‑employed

hypothesis, financial factors may affect theemployer and employee (Wer/Wee). As the

choice to become self‑employed, and here, we

distribution of this variable is skewed, its

use living with parents and household income

natural logarithmic forms are used.

as the liquidity constraint index.

We also distinguish employee wages by

It is pointed out that social capital alsoprivate and public sector and perform robust

affects the choice of entry to self‑employment.

checks to test the hypotheses. Reduced wage

It is thought that with higher social capital,

function estimation results are utilized tothere is a greater possibility for settling

calculate these imputed wages and wage

liquidity constraint problems and thus a

differentials.

greater

self‑This paper focuses on self‑employed emplo-

employment. We use two variables─social

chanceforsuccess

withyers, own‑account workers, employees, andrelations numbers and frequ-ency of contact tothe unemployed. Considering that the retire-

relations─as the index of social capital, using

ment system is structured within the public

the following questionnaire items: How many

sector, in order to diminish the effect of that

persons do you contact? and How frequently

system on analysis results, the analytic objects

do you contact your relations?

are limited to groups between the ages of 16

We also consider the influences of someand 60. The samples utilized in the following

special factors in the Chinese labor market.
For example, in urban China, the change fromrural registration to urban registration is very
difficult except under special conditions, suchas workers with higher levels of schooling or───────────
７ Wage survey items in CHIP2007 for migrants
comprise the basic wage, so the logarithm of themonthly wage based on the basic wage isutilized in the paper.

Economic Transition and Self‑employment of Migrants in Urban China

８５different and may be one explanation for theseempirical studies comprise 6,267 migrants.

regional disparities.

4. Descriptive Statistics Results
4.1 Distributions of employment status of

4.2 Wages, work hours and household income
by employment status groups of migrants

migrants in urban China
The distributions of employment status ofWages, work hours, and household income

migrants in urban China are shown in Table 2.

by employment status group of migrants are

The divisions are as follows: 4.63% self‑

shown in Table 3.

own‑accountConsidering average wages, compared withworkers, 63.99% employees, and 12.38% the

employees, the wages are higher for self‑

unemployed.

employed employers (oa/ee1.32) and own‑

employed

employers,

19.00%

There are regional disparities in the distribu-

account workers (er/ee1.75). There are work

tions of employment status. For example, thehour disparities among employment statuspercentages of the own‑account workers aregroups. Concretely, compared with employees,

greater in the Central (26.95%) and Westthe work hours are longer for both own‑

regions (20.14%) than that in the East region

account workers (oa/ee1.39) and self‑employed(13.96%), whereas the percentages of emplo-

employers (er/ee1.37). However, the household

yees are greater in the East (74.56%) and West

income differentials by employment statusregions (63.77%) than that in the Central region

group are smaller.
Although(46.21%). The labor demand for employees
resultingfrom

economicdevelopment

is

these

tabulatedcalculations

indicate the existence of wage, work hours,

Table2 Distributions of employment status of migrants
Total
Self‑employed Employer
Own‑account woker
Employee
The unemployed
Total
Number of observations

4.63
19.00
63.99
12.38
100
6,267

East
4.18
13.96
74.56
7.30
100
3,302

Central
5.84
26.95
46.21
21.00
100
1,952

West
3.75
20.14
63.77
12.34
100
1,013

Source: Calculated using CHIP2007.
Note: Calculated for groups aged16〜60.

Table3 Wages, work hours and household income by employment status group of migrants
Wages monthly(Yuan)
Workhours weekly(Hours)Household income
yearly(Yuan)

Mean
Std Deviation
Mean
Std Deviation
Mean
Std Deviation

Source ： Calculated using CHIP2007.

Employee
1480
803
57
14
25959
21893

Employer
2583
1893
78
18
25407
24614

Own‑account
1952
1542
79
19
26452
22360

oa/ee
1.32
1.92
1.39
1.36
1.02
1.02

er/ee
1.75
1.90
1.37
1.29
0.98
1.12

８
６

and

中国経済研究householdincomedifferentials

byemployment status group, it is not clear as to第１３巻第１号

employer or an own‑account worker for
workers with children is lower.

what determines the choice of employment

Second, the probability to become a self‑

status and which hypothesis explains self-

employed employer increases with increase inemployment of migrants. These questions will

the household income. This can be explained

be answered using the econometric analysis

byresults discussed in the following section.

problem for self‑employed employers in thesetheexistenceofliquidity

constraint

two groups. This result provides evidence that

5. Econometric Analysis Resultsin trying to create new jobs or businesses,

5.1 What determines the choice to become aself‑employed worker?

policies (such as financial support policies forsmall enterprise) to resolve liquidity constraint

Table 4 shows the estimated results of thedeterminants of employment status of migrants.
First, demographic variables affect employ-problems

areimportantinatransition

economy (and elsewhere).
Third, compared with workers in the Westment status choices. For example, there is anandadverseCentralregions,

theprobabilityof

U shape relation between age andbecoming a self‑employed worker is lower forself‑employment (to become a self‑employed

those in the East region. This may be because

employer or an own‑account worker). The

compared with the West and the Central

probability

regions, the level of economic development isofbecomingaself‑employed

Table4 Determinants of employment status of migrants

Age
Age squared/100
Schooling years
Health status (Bad)Very good
Good
Fair
FemaleHan race
MarriedChild
Living with parents
Household income
Father: senior high school and overFather: manager
Hukou change methods
Relations
The frequency of contact to relations(One time weekly)
One time monthly
One time yearly
Region(West+Central regions)
East region
Constant
Number of observations
Log likelihood
Pseudo R2
Chi‑squared
Source: Calculated using CHIP2007.
Note: 1. *, **, ***: statistical significant in 10%, 5%, 1% level.
2. Reference category is employee group.

Employercoeff.
z‑value
0.3306 ***4.58‑0.4110 ***‑3.99‑0.0104‑0.26

Own‑Accountcoeff.
z‑value
0.3122 ***8.14‑0.3631 ***‑6.83‑0.1577 ***‑6.57

Unemployedcoeff.
z‑value‑0.0318‑0.76
0.06981.18‑0.1857 ***‑6.03

0.17230.3093‑0.2501‑0.1958
0.2453‑0.3636‑0.8670 **0.06050.3491 **‑0.7017 *‑0.0185‑11.51780.0004

0.22
0.40
‑0.31
‑1.04
0.33
‑0.34
‑2.37
0.29
2.22
‑1.95
‑0.04
‑0.01
0.44

0.1338‑0.11020.0109‑0.05100.4199‑0.2126‑0.6703 ***‑0.0060
0.1629 *‑0.3271 *0.0416
0.53764.2500E‑05

0.32
‑0.27
0.03
‑0.45
0.92
‑0.39
‑3.03
‑0.05
‑1.79
‑1.81
0.16
0.35
0.06

‑0.8155 *‑0.6482‑1.1317 ***‑1.8992 ***‑0.1546‑0.0901‑0.3602‑0.1968‑0.1211‑0.12170.0349‑10.4605‑0.0023

‑1.93
‑1.55
‑2.53
‑12.24
‑0.31
‑0.14
‑1.40
‑1.19
‑1.10
‑0.58
0.11
‑0.01
‑1.19

‑0.0532‑0.1264

‑0.27
‑0.35

0.15240.13441.30
0.66‑0.1869‑0.2699

‑1.23
‑0.97

‑0.8698 ***‑4.6793 **

‑4.18
‑2.08

‑1.2964 ***‑3.9343 ***2691‑2295.2409
0.1562850.0100

‑9.97
‑3.06

‑1.1018 ***3.8134 ***

‑6.59
2.61

Economic Transition and Self‑employment of Migrants in Urban China

８７differentials between employees and own‑

higher in the East region, so labor demands areaccount workers are not statistically significant.

also relatively higher in that region.
Finally, holding other factors (e.g., demogra-

Holding other factors constant, a worker canphic variables, household income) constant, thegain more economic benefits by becoming a

influences

Hukou

self‑employed employer but gains less bychange methods on self‑employment are notofsocialcapitalandbecoming an own‑account worker or employee

statistically significant.

in formal sector. Compared with the employee,
the economic benefit for the self‑employed

5.2 Hypothesis test: business creation or

employer is better, but it is not clearly for the

disguised unemployment?

own‑account worker. Based on these estimated

Next, we turn to the hypothesis test results.

results, the disguised unemployment andFirst, the multivariable regression analysis ofbusiness creation hypotheses are not clearlywages based on Eqs. (2.1)‑(2.3) is shown insupported. In addition, the results using

Table 5.

subsamples show a standard shape of theEstimated results show the existence ofwage function for employees, particularly inwage differentials between employment statusterms of human capital variables and gender,groups. For example, compared with thewhereas the effects of these factors on theemployee wages are 27.46% percentage higher

wages of self‑employed employers and own‑

for the self‑employed employer, whereas wage

account workers are small.

Table5 Wage function of migrants by employment status groups

Employment status(Employee)
Self‑employed employer
Own‑account worker
Age
Age squared/100
Tenure years
Tenure years squared/100
Schooling years
Learning achievement
Health status (Bad)Very good
Good
Fair
FemaleHan race
MarriedTrainingIndustrials(No‑Manufacture)
Manufacture
Region(West+Central regions)
East region
Lambda(employees)
Lambda(employers)
Lambda(own‑account)
Constant
Number of observations
adj R‑squared

Total samples
coeff.
t‑valuecoeff.

0.2746 ***0.00260.0258 ***‑0.0442 ***0.0405 ***‑0.1394 ***0.0529 ***0.0162

5.93
0.10
2.72
‑3.58
7.76
‑5.41
7.37
0.71

0.0395 ***‑0.0611 ***0.0473 ***‑0.1328 ***0.0455 ***0.0270

4.25
‑4.94
7.85
‑4.40
6.95
1.07

‑0.05310.0561
0.0948 **‑0.6366 **0.02170.0455

‑0.71
0.58
2.07
‑2.51
0.31
0.27

‑0.0546
0.06430.0214‑0.0755
0.0514 ***‑0.1452 **

‑1.52
1.43
1.58
‑1.24
2.76
‑2.09

0.0506
0.0699‑0.0153‑0.1301 ***0.02230.00560.0214

0.60
0.85
‑0.17
‑3.08
0.31
0.06
0.74

0.05080.05840.0407‑0.1299 ***0.0197‑0.02990.0875 ***

0.50
0.57
0.39
‑4.37
0.26
‑0.25
2.58

0.41930.20130.2939‑0.15020.45930.1137‑0.3522

0.70
0.33
0.47
‑0.58
0.81
0.13
‑1.54

0.01380.0260‑0.1313‑0.1199 *0.3052
0.3429‑0.1275 *

0.07
0.13
‑0.64
‑1.73
1.24
1.28
‑1.71

‑0.0460 *‑1.75‑0.0565 **‑2.23

0.51421.19‑0.0796‑0.44

0.4652 ***‑1.6685 ***2.0140 **‑1.1918 ***0.67442918
0.2162

9.24
‑2.82
2.25
‑2.65
0.94

0.3207 ***‑0.0169‑‑0.21021687
0.2446

6.73
‑0.05
‑
‑
0.94

0.3010‑0.1312‑
1.9633135
0.0463

0.64
‑
0.03
‑
0.54

0.5850 ***‑‑‑1.49542.7318 **547
0.1072

4.33
‑
‑
‑1.44
2.17

Source: Calculated using CHIP2007.
Note: *, **, ***: statistical significant in 10%, 5%, 1% level.

Employeez‑valuecoeff.

Employerz‑valueOwn‑accountcoeff.
z‑value

８８

中国経済研究Second, in order to directly test these

第１３巻第１号

unemployment

hypothesis.

These

results

hypotheses using the imputed wages calculated

further reflect the possibility of a job‑rationing

based upon the results shown in Table 5, theproblem in the Chinese urban labor market.

reduced multinomial logit analysis is estimated.

We also perform a robust check of the

These estimated results are represented in

hypothesis tests, and these results are shown

Table 6.

in panel B of Table 6. Considering the labor

The results shown in panel A of Table 6

market in urban China is segmented by theindicated that the probability of becoming apublic and private sectors, and the wage levelself‑employed employer is estimated to bein the informal sector is close to that in thenegatively affected by the wage premium

private sector, we analyze the estimated(logWer/Wee ‑0.7672). It is revealed that

results of the effects of wage premiums

although a worker may recognize that there is

between the private sector and other sectors

an economic loss associated with becoming a

in the following discussion．

self‑employed employer, there may be no

The influences of wage premiums (logWer/chance to become an employee, so the worker

Weepri) on the probability of becoming a self‑

has no choice but to enter the informal sector

employed employer are negatively significant

and become a self‑employed employer. In this(‑0.6948). These results are consistent with thecase, the disguised unemployment hypothesis

above,

is supported. In addition, the influence of the

hypothesis is supported, whereas the businesswage premium (logWoa/Wee) on the probabi-

creation hypothesis is rejected. In addition, thelity of becoming an own‑account worker isinfluence of the wage premium (logWoa/

insignificant,economic

Weepri) on the probability of becoming an

benefits accruing from wage premiums do not

own‑account worker is statistically insignifi-

influence the probability of becoming an own‑cant, so the business creation hypothesis isaccount worker. It also supports the disguised

rejected in these two groups again.

showing

that

the

and

the

disguised

unemployment

Table6 Results of hypothesis test
Employercoeff.
z‑value
Panel Alog(Woa/Wee)log(Wer/Wee)Panel Blog(Woa/Weepri)
log(Wer/Weepri)
log(Woa/Weepub)log(Wer/Weepub)

Own-accountcoeff.
z‑value‑0.7700‑0.7672 ***

‑0.99
‑3.26

0.0445‑0.7562 ***

0.09
‑4.46

‑0.8473‑0.6948 ***1.1734 *‑0.6681 ***

‑1.05
‑2.94
1.76
‑2.76

‑0.0558‑0.7367 ***1.8094 ***‑0.6303 ***

‑0.11
‑4.34
4.42
‑3.70

Source: Calculated using CHIP2007.
Note: 1. *, **, *** : statistical significant in 10%, 5%, 1% level.
2. The specification of Strauctural MNL is similar to that shown in Table3, but dependent variable
has only three categories(omitting unemployment group) and the predicted wage differentialslog(Woa/Wee) and log(Wer/Wee) are added to the regressors. All other independent variables
shown in Table3 are also inculused here, but not shown.

Economic Transition and Self‑employment of Migrants in Urban China

８９

migrants has to face business risks and6. Conclusions

liquidity constraints. If the self‑employedtheemployer (e.g., the owner of a small private

determinants of self‑employment for migrantsfirm) cannot settle the liquidity constraint

in urban China. Using CHIP2007, the employ-problem through the formal financial market

ment status is divided into four categories: self‑(e.g., by getting a loan from a government

employed employers, own‑account workers,bank), business continuity will become difficult.

employees, and the unemployed. Several major

liquidity constraint problems already exist in

conclusions emerge.

China. It is known that the public banks do not

This

paper

providesevidence

onFirst, compared with the employee, holding

like to lend to small private firms, so mostother factors (e.g., human capital) constant, thesmall firms gain financial support throughwage premium associated with the self‑

informal financial markets (e.g.. inter‑household

employed employer is higher, while the wage

and inter‑household risk sharing and illegal

premium associated with own‑account workers

loans). The estimated results in this paper

is statistically insignificant.

showed that the effect of household income on

Second, the probability of becoming a self‑

the self‑employed employer group is greaterbethan that for the other groups. In order tonegatively affected by the wage premium

promote more new business for greater(logWer/Wee ‑0.7672), and the influence of theeconomic growth in the future, the Chinese

wage

government should establish and implement

employed

employerpremiumisestimated(logWoa/Wee)

to

on

the

probability of becoming an own‑accountfinancial support policies for small firms.

worker is statistically insignificant, showing

A second implication is the relation withthe business creation hypothesis is rejected andlabor market segmentation by the formal andthe disguised unemployment hypothesis is

informal sectors. It is thought that this

supported.

segmentation results from human capital

Third, the influence of the wage premium

endowment differentials and some system(logWer/Weepri) on the self‑employed emplo-

discriminations (Knight and Song 1999; Cai, Du

yer is negatively significant, and the influenceand Wang 2005; Ma 2011). For example, mostof the wage premium (logWoa/Weepri) on the

migrants cannot be recruited by the publicown‑account workers is statistically insignifi-

sector. In addition, it is known that in urban

cant, the business creation hypothesis is

China, social security systems differ between

rejected and the disguised unemployment

the formal and informal sectors. In the public

hypothesis is once again supported.

sector, firms charge a portion of the social

These

estimatedcomparedwithresults

employees,

revealedthat

security premium for their employees, whereas

self‑employedmost workers in the self‑employed sector

employers and own‑account workers do nothave to pay the social security premium bygain more, and there seemingly are no better

themselves,choices for migrants in urban China. Some

welfare) are more for employees who work inpolicy implications based on these empiricalthe public sector than those who work in the

study results should be pointed out here.

private sector. To diminish the segmentation

One implication is that an employer of

and

the

compensations(firmof the informal sector and the formal sector in９０

中国経済研究urban China, the integration of the social
security system is an important issue for the
Chinese government.
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９２

中国経済研究第１３巻第１号

Economic Transition and Self-employmentof Migrants in Urban China
Xinxin Ma (Institute of Economic Research, Hitotsubashi University, Japan)
Quheng Deng (Institute of Economics, Chinese Academy of Social Sciences, China)
Keywords: migrants, self‑employment, economic transition, business creation,
urban China
JEL Classification Numbers: J23, J31,O17
This paper provides evidence on the determinants of self‑employment for migrants in urban
China. Using CHIP2007, the employment status is divided into four categories: self‑employedemployers, own‑account workers, employees, and the unemployed. Several major conclusions
emerge. First, compared with the employee, holding other factors (e.g., human capital) constant, thewage premium associated with the self‑employed employer is higher, while wage premium
associated with own‑account workers is statistically significant. Second, the probability of
becoming a self‑employed employer is estimated to be negatively affected by the wage premium(logWer/Wee), and the influence of the wage premium (logWoa/Wee) on the probability of
becoming an own‑account worker is statistically insignificant, showing the business creation
hypothesis is rejected and the disguised unemployment hypothesis is suppored. Third, the influenceof the wage premium (logWer/Weepri) on the self‑employed employer is negatively significant,and the influence of the wage premium (logWoa/Weepri) on the own‑account workers is statisticalinsignificant. Based on these robust check results, the business creation hypothesis is rejected andthe disguised unemployment hypothesis is supported once again. These results revealed thatcompared with the employees, the self‑employed employers or the own‑account workers are
seemly not better choices for migrants in urban China. It is indicated that in order to promote more
new business for greater economic growth in the future, the establishment and implementation of
the financial support policies for the small firms, the registration system reform and the integration
policies of employment and social security system are important issue for Chinese government.