Destination choices of Chinese rural-urban migrant workers: Jobs, amenities, and local spillovers

Using the 2014 China Migrants Dynamic Survey, we analyze rural-urban migrant workers' destination choices after the global financial crisis, with an emphasis on jobs, amenities, and local spillovers. By using an equilibrium-sorting model, this paper disentangles local spillovers from local attributes in the estimation process. We employ both an artificial instrumental variable and the provincial highway passenger flow in 1979 to tackle the endogeneity issue. After controlling for the network effects of migrants from the same origin, we find a separate and strong preference for colocating with a large population of migrants, regardless of origin. The results remain robust when we take into account labor supply-driven migration, spatial autocorrelation between provinces, different industry definitions, and regional differences within provinces. Our results imply that due to institutional barriers, the rural-migrant community will still be a very important factor in the foreseeable future. In addition, as the ongoing industrial upgrading and transfer policies in China may lead to a westward movement of rural-urban migrants, the movement will be expedited when the older, less educated, or lower income migrants relocate.