Three Essays on Labor Supply in China

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Virginia Tech


This dissertation consists of three essays studying the determination and evolution of labor supply in China. The analysis especially focuses on the labor market behavior of the wage workers with urban registration (Hukou). The first chapter outlines the dissertation by briefly discussing the motivations, methods, and main findings in each of the following chapters.

Chapter two examines the evolution of female labor supply in urban China. Female labor force participation rate in China has been declining rapidly over the last three decades. Using a time series of cross-sections from the Chinese Household Income Project Series (CHIPS), this chapter attempts to systematically relate the decrease in female labor force participation to the socio-economic changes happening in China during the same period, and assess their respective contributions. Adopting both linear and non-linear decomposition techniques, the results show that during 1988-1995, changes in population age distribution and family size both contribute, during 1995-2002, age effect dominates, and during 2002-2007, non-labor income effect dominates in explaining the decreasing trend in female labor force participation.

Chapter three investigates the impact of social norms on married women's labor supply decision in China. Using data from the China General Social Survey (CGSS) and the China Family Panel Studies (CFPS), we find a strong and robust positive correlation between the labor supply behavior of a married woman and the former work experience of her mother-in-law. Our estimation results indicate that being raised by a working mother influences both a man's attitude toward gender roles and his household productivity, and therefore married women whose mothers-in-law were not working are themselves significantly less likely to participate in the labor force.

The last chapter evaluates the labor market consequence of rural-to-urban migration in China. Starting from the mid-1990s, there is a remarkable increase in the number of migrant workers in cities, from around 39 million in 1997 to 145 million by 2009 (Meng et al. 2013). Chapter four intends to explore how does this important economic event affect the labor market conditions of urban residents. Specifically, we estimate the possible employment and earnings displacement effects of rural-to-urban migration on urban residents by exploiting regional variation in the rural migrant share of education-experience cells. We use multiple sets of instrumental variable to address the potential endogeneity problems associated with the rural migrant ratio in a city. The estimation results are consistent with the predictions of the textbook model of a competitive labor market, indicating the inflow of rural migrants reduces the wage and labor supply of competing urban residents.



Female Labor Force Participation, Decomposition, Social Norms, Rural-to-urban Migration, China