URBAN INSIDERS VERSUS RURAL OUTSIDERS:COMPLEMENTARITY OR COMPETITION IN CHINA’S URBANLABOUR MARKET?

In China urban residents have traditionally been protected against labour marketcompetition from rural-urban migrants. Over the period of urban economic reform, rural-urbanmigration was allowed to increase in order to fill the employment gap as growth of labourdemand outstripped that of the resident labour force in urban areas. However, as reforms gainedpace and controls were lifted, it is plausible that migrants and urban residents increasinglycompeted. The paper examines whether the relationship is one of complementarity in a stillsegmented labour market or of substitutability in an increasingly competitive labour market. Ituses attitudinal responses from two urban surveys and a panel data set covering the 30 provincesover the period 1994-2000. We obtain very different results from cross-section, random effectsand fixed effects panel estimates, raising interesting methodological issues. The findings areconsistent with the presence of continued labour market segmentation but suggest also thatcompetition between the two groups may be increasing....