employer contribution (under 2009 guidelines). Thus, while the higher contribution wedge at low incomes may discourage local workers, the lack of portability of the pension (driven by institutional fragmentation) lowers the expected value of participating for migrants far more than for local _hukou_ workers, and this effect is felt by all migrants.

# **4.4 Voluntary Participation in Social Insurance Programs**

As summarized in Table 1, those workers who are not employed in urban enterprises now have several different social insurance programs (pension, health or unemployment) in which they may choose to participate. These include health and pension programs based in urban areas (residents’ health insurance and pension) and programs based in their home villages (the new rural collective medical system, and the new rural collective pension). The residents’ and rural pension programs were both just starting at the time of the survey, and participation was relatively low. For this reason we concentrate below on analyzing the correlates of participation in residents’ health insurance and migrant participation in the new rural collective medical system (NRCMS) insurance in 2010.<sup>42</sup> As these programs are targeted to residents who are not necessarily in formal sector work units, the estimation sample includes all working age adults for participation in residents’ health insurance, and all working age migrants for participation in NRCMS. We include standard sets of controls, and also report specifications that include an indicator variable for whether the respondent participates in medical insurance through their employer.<sup>43</sup> From the marginal effects reported in Table 8, participation in the residents’ medical insurance program is declining slightly in years of schooling, in contrast to employer-based coverage. This is not surprising as the program is targeted to individuals who may not be eligible for employer-based insurance, and participation in employer-based schemes is increasing in education. Migrants, in particular rural _hukou_ migrants, are less likely to participate, which likely reflects the intent to target local _hukou_ residents. A significant negative coefficient on participation in employer-based medical insurance highlights the substitutability of the two programs. Finally, there is a strong positive association between status as a selfemployed worker and participation in residents’ medical insurance. The fall to zero in the coefficient on the self-employed indicator once both this variable and the employer-based indicator are included highlights the relationship between choice of employment sector and choice of coverage. Those workers employed before insurance was available made a (potentially constrained) choice of sector first, for which

> 42In Appendix Tables A.6 and A.7 we include results from probit models examining decisions to participate in the new rural pension or residents’ pension. As participation rates were very low, we learn little from these explorations. 43This indicator is endogenous as it reflects a choice between participating in an employer program or voluntary program. One might favor multinomial logit specifications with two alternative choices, but some respondents report participating in both employer-based social insurance and voluntary programs, suggesting that these choices are not mutually exclusive.

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