# **2 Migrant Social Insurance Participation**

Rural-urban migration has played a significant and well-appreciated role in China’s economic growth miracle (Bosworth and Collins, 2008; Tombe and Zhu, 2015). During the 1990s and 2000s, rural China was an abundant source of young workers (16-25 years of age), who supported the growth of labor-intensive industries. Despite their significant contributions, migrants are treated as “guest workers” in cities under China’s household registration ( _hukou_ ) system: the social insurance programs and services benefitting urban locals are either not available to migrants, or are unsubsidized and much more expensive. Lack of access to social insurance in cities leads migrants to return to rural areas when sick or unemployed, to raise their families or to care for elderly family members (see, for example, Giles and Mu, 2007; Meng, 2012). Consequently, _hukou_ restrictions shorten the duration of migrant stay in cities (which currently average to 8-9 years), limits the potential stock of migrant labor supply in cities as older migrants return home, and thus exacerbates a labor shortage and contributes to rising labor costs.

Recognizing that permanent migration may help to solve labor shortage problems, the central government has introduced laws and regulations requiring employers to contribute to the social insurance accounts of migrant employees. The 2008 Labor Contract Law stipulates that all workers are entitled to participate in urban social insurance programs, that details of the schemes should be explicitly written into labor contracts and that all migrant workers should have a written contract (Gallagher et al., 2014; Meng, 2017). In 2010, the central government provided new guidelines on pension portability, which allows migrants to transfer 12% of their employer’s contribution, in addition to their own contributions, to accounts either in new migrant destinations or in their home counties (State Council, 2009). In mid-2011 a new Social Insurance Law explicitly stipulated that employees should participate in social insurance programs, and that the self-employed may participate voluntarily. Further, fines may be imposed on employers who fail to make contributions to their employees’ accounts in a timely manner (National People’s Congress, 2011).

Despite efforts of the central government, the urban social insurance participation rates of migrant workers in urban programs remain low. Evidence from the RUMiC survey suggests only a modest increase in pension and health insurance participation rates over the period from 2008 to 2016 (see Panels A and B of Figure 1). By 2016 the health insurance and pension participation rates for the full sample were both just over 34%, with higher rates for employees than the self-employed. Among employees (Panels C and D of Figure 1), it is evident that higher participation rates are strongly associated with having a written contract. Participation rates among individuals without written contracts are similar to those of the self-employed. While participation among employees increased between 2011 and 2012, when fines were imposed on employers who failed to contribute their share to 6