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Place of Origin and Labour Market Outcomes Among Migrant Workers in Urban Chunni Zhang and Yu Xie Urban Stud published online 11 April 2013 DOI: 10.1177/0042098013482499

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Place of Origin and Labour Market Outcomes Among Migrant Workers in Urban China

Chunni Zhang and Yu Xie

[Paper first received, March 2012; in final form, November 2012]

Abstract The localistic enclave is a special kind of enclave in urban China, which is charac- terised by a high concentration of rural migrants from the same place of origin. Prior research has documented that rural migrants work in these localistic enclaves, but the significance of participation in them for labour market outcomes among migrant workers has yet to be determined. In this article, it is argued that localistic economic enclaves may improve the labour force outcomes of rural-to-urban migrants. Results are reported from a study of the social determinants and conse- quences of working in localistic enclaves, based on data from a 2010 survey of migrant workers in the Pearl River and the Yangzi River deltas. The results provide limited support for the hypothesis: localistic enclaves enable migrant workers to earn higher earnings overall, but the earnings returns to human capital in an enclave are limited.

Since the late 1980s, China has been marked places of residence (National Bureau of by the extensive migration to urban areas of Statistics of China, 2011). Most of them rural populations attracted by job opportu- were rural migrants who sought employ- nities (Liang, 2001). This massive wave of ment in urban areas. A common miscon- rural-to-urban migration has been driven ception is that this rural-to-urban migration by the demand for labour in urban China has been disorderly, characterised by unor- and facilitated by the relaxation of the gov- ganised individual migrants being driven by ernment’s control through the household their own economic interests (Ma and registration system (hukou). In 2010, over Xiang, 1998). For example, popular media 220 million persons left their registered once portrayed such migration as ‘blind

Chunni Zhang is in the Department of Sociology, The Chinese University of Hong Kong, Hong Kong. Email: [email protected]. Yu Xie (corresponding author) is in the Institute for Social Research, University of Michigan, 426 Thompson Street, Ann Arbor, Michigan, 48104, USA. Email: [email protected].

0042-0980 Print/1360-063X Online Ó 2013 Urban Studies Journal Limited DOI: 10.1177/0042098013482499 Downloaded from usj.sagepub.com at UNIV OF MICHIGAN on April 15, 2013 2 CHUNNI ZHANG AND YU XIE flow’ (Florence, 2006; Yang and Cai, 2007; Ma and Xiang, 1998; Wang, 1995; Wang Zhan, 2003). However, in-depth studies and Yang, 2008; Yang and Wang, 2008). have rejected this stereotyped image and Researchers taking this approach are con- have revealed instead that migration in cerned primarily with the emergence of a today’s China is actually socially organised localistic enclave and the evolution of its by families, village clans and township gov- social structure and operation. ernments. Among many formal and infor- Previous studies of localistic enclaves mal social institutions that affect migrants, have been mainly descriptive in document- the localistic network (or laoxiang network), ing the phenomenon of localistic networks a social network based on place of origin, in urban China. To be sure, the significance has emerged as one of the most widespread of localistic networks for labour market and most effective mechanisms in organis- outcomes among migrant workers has been ing and facilitating the rural-to-urban recognised in the existing literature. For migration in China today. example, migrant enclaves have been Prior studies of rural-to-urban migra- described as emphasising the ‘power of tion have not only documented the exis- place’ in providing rural migrants with tence of localistic networks but also have resources and opportunities that would described their function in terms of favour- otherwise be unavailable to them (Ma and itism. Rural migrants are more willing to Xiang, 1998). However, no empirical offer assistance to migrants who share their research has actually evaluated the impact own places of origin in finding jobs, obtain- of participation in localistic enclaves for ing housing and otherwise adapting to migrants’ labour force outcomes. To help urban life. On the factory floor, the localis- fill this knowledge gap, our study addresses tic network penetrates power relations three research questions. What kind of involving managers, foremen and migrant rural migrants are more likely than others workers. Opportunities for desirable jobs to work in localistic enclaves? Does working and promotions are sometimes controlled in localistic enclaves bring higher wages to and distributed through localistic networks migrant workers compared with those (Lee, 1998). In this literature, many scho- working in the open economy? Are earnings lars have emphasised dyadic laoxiang ties returns to human capital higher in localistic involving two persons from the same place enclaves than in the open economy? of origin who engage in reciprocal favourit- Our article is divided into four sections. ism (Lee, 1998; Wang and Tong, 2004; In the first section, we introduce the signifi- Wang et al., 2002). cance of native-place ethnicity in the history Researchers have also studied localistic of internal migration in China and place the networks defined as migrant communities. issue of localistic enclaves within this tradi- Rural migrants from the same place of tion. We also review empirical findings on origin often aggregate: they tend to reside localistic enclaves in contemporary urban in the same neighbourhoods, specialise in China in light of the enclave-effect debate in the same occupations and/or work for the the immigration literature in the US. In the same employers. When their concentration second section, we propose specific hypoth- in a place passes a critical point, the place eses regarding enclave effects in China’s may be called a migrant localistic enclave. rural-to-urban migration context. To test Several studies have already documented our hypotheses, in the third section we ana- the formation and operation of these loca- lyse survey data collected in the Pearl River listic enclaves in urban China (Liu, 2002; and Yangzi River deltas in 2010, with two

Downloaded from usj.sagepub.com at UNIV OF MICHIGAN on April 15, 2013 MIGRANT WORKERS IN CHINA 3 measures of enclave participation. Finally, period 1850–1940, migrants in ’s we conclude that our study lends limited labour market were segregated by their support to the proposition that a localistic places of origin: migrants from southern enclave improves migrant workers’ labour in textile mills, migrants from force outcomes: localistic enclaves enable northern Jiangsu as dock coolies or rick- migrant workers to earn higher earnings shaw pullers and migrants as overall, although the earnings return to bathhouse attendants (Honig, 1992). An human capital in an enclave is limited. institutional manifestation of localistic eth- nicity was the widespread existence in urban China of native-place associations (tong- Native-place Ethnicity: Historical xiang hui), the purpose of which was to and Contemporary Significance strengthen solidarity among migrants, pro- viding financial support, education and wel- The organisation of migrants according to fare only to co-ethnics (Cole 1996). place of origin is a well-known phenom- After the People’s Republic of China was enon in the history of internal migration in founded in 1949, the government tried to China. Despite the pretence of a common eliminate all native-place associations and culture, Han, Chinese people from different imposed restrictions on migration through places of origin vary greatly in terms of cus- the household registration (hukou) system. toms, spoken language, habits, manners These government efforts substantially wea- and, above all, social identity. Chinese kened the influence of native-place ethnici- people tend to differentiate themselves in ties in employment, although ethnicity-based terms of place of origin to the extent that discrimination in ordinary lives persisted identities and relationships in terms of place (Honig, 1992). However, the revival of inter- of origin can be considered ethnic (Honig, nal migration after the initiation of the eco- 1992). Ethnicity here, as defined by Honig, nomic reform in 1978 has restored the social results from a heightened recognition of significance of native-place ethnicities. As cultural distinctiveness for social signifi- before, migrant workers in urban China cance. The social significance of localistic today tend not only to rely on their localistic ethnicity is enhanced by massive migration, networks to find urban jobs but also to segre- which enables people to mix with those who gate along these lines, occupationally and/or come from different places, speak different residentially. Many past studies have thor- dialects, practice different customs or oughly documented the existence of localistic belong to different cultures. In her ethno- enclaves in urban China: Pingjiang Cun in graphic study of migrants from northern Shenzhen (Liu, 2002) and Zhejiang Cun (Ma Jiangsu (i.e. Subei) province to Shanghai and Xiang, 1998; Wang, 1995) and Xinjiang from 1950 to 1980, Honig (1992) documen- Cun in Beijing (Wang and Yang, 2008; Yang ted that, before moving to Shanghai, people and Wang, 2008). While these ethnographic in northern Jiangsu province never identi- studies reveal vividly the actual operation of fied themselves as members of the Subei localistic enclaves, they are primarily con- group. Once they came to Shanghai, they cerned with the role of the hukou system formed the Subei ethnic group based on as a structural barrier segmenting the their common place of origin. One conse- urban market into two unequal ones: an quence of this was that localistic ethnicity open market for native urbanites and another provided bases for the occupational segrega- market with limited opportunities for rural tion of migrants. For example, during the migrants.

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Ma and Xiang’s (1998) study focuses on immigrants have also faced a different migrant workers in localistic enclaves in economy, due to deindustrialisation in the Beijing. Their study rejects the stereotyped US in recent decades, which affords them image of rural migrants as being disorderly limited opportunities for economic assimi- and hopeless and emphasises instead the lation through well-paid manufacturing positive influence of localistic enclaves on jobs. To make matters worse, immigrant migrants’ experiences. Although rural children, who often live in inner cities migrants often face discrimination by local upon entering the US, are vulnerable to the governments withholding certain resources adversarial sub-cultures of inner-city from them, they can resort to localistic native-born minorities and, therefore, are enclaves as an alternative channel for at risk for downward assimilation into the resources. Such ethnographic works as Ma lower classes (Zhou, 1997). One possible and Xiang’s contain vivid illustrations of way to protect immigrants and their chil- migrants in localistic enclaves starting their dren against downward assimilation is the own businesses or obtaining employment preservation of native culture, or partial with the help of their fellow co-ethnics in the assimilation. This perspective emphasising same enclave, collectively confronting local the benefit of preserving immigrants’ own government officials over treatments they culture is called segmented assimilation feel are unfair, or co-operating to triumph theory (Portes and Zhou, 1993). competitively over other localistic ethnic Proponents of segmented assimilation groups and ending up monopolising certain stress the importance of social resources industries. However, while consistent with offered by co-ethnics in the ethnic commu- the assumption that localistic enclaves have nity. For economic outcomes, the theory positive influences on migrant workers, such predicts that participation in an enclave success stories do not constitute empirical economy is an alternative way for immi- proof of enclave effects. The problem is one grants to achieve economic advancement or of heterogeneity: localistic enclaves are all to capitalise more effectively on their pre- different and have different effects on differ- immigration human capital (Portes and ent migrant workers. If we wish to assess the Bach, 1985; Portes and Jensen, 1987, 1989). impact of localistic enclaves on the labour Xie and Gough (2011) call this prediction force outcomes of migrant workers, it is nec- the ‘enclave thesis’. Despite its theoretical essary systematically to compare migrant appeal, several studies have failed to find workers in enclaves to those not in enclaves. empirical support for the enclave thesis (Nee A similar debate has developed in studies et al., 1994; Sanders and Nee, 1987; Xie and of immigrants to the US. The debate was Gough, 2011). In fact, the aforementioned motivated by the recognition that the new studies have found immigrants working in wave, post-1965 immigrants to the US are enclaves to be disadvantaged in earnings, or different from the earlier wave of immi- their earnings returns to human capital to be grants before 1910 in terms of both the lower than those of immigrants working in immigrants themselves and America as a the open economy. The longer they reside at host society (Portes and Zhou, 1993). The their destination, the more likely immi- new immigrants have come primarily from grants are to move into the open labour Latin America and Asia and thus are cultu- market and the less likely they are to use rally more distinct from mainstream ethnic ties to find jobs (Nee et al., 1994). American society than earlier immigrants, One argument against the enclave thesis is who came primarily from Europe. The new that the isolation of working in an enclave

Downloaded from usj.sagepub.com at UNIV OF MICHIGAN on April 15, 2013 MIGRANT WORKERS IN CHINA 5 economy can delay the long-term assimila- Yangzi River delta. From the survey items, tion of immigrants (Xie and Gough, 2011) we constructed two measures of localistic and enclave employers may exploit co- (laoxiang) enclaves which we believe are ethnic workers under the mask of ethnic sol- superior to measures in previous studies idarity (Bonacich, 1987). evaluating the enclave thesis. Before we abandon the enclave thesis, however, it is important to realise a metho- dological limitation of the existing studies The Research Questions that have found empirical evidence against the thesis: reliance on poor measures of According to the previous literature, an enclave participation (Portes and Jensen, enclave economy can be beneficial in three 1987, 1992). In most studies that attempt respects. First, it can serve as a shelter for to evaluate the enclave thesis, enclave par- weak workers, those who lack skills needed ticipation is poorly measured, based on to secure employment in the open economy. such characteristics as location of work- Secondly, it can benefit all migrant workers place or residency (Portes and Jensen, 1989; by offering resources and information to Sanders and Nee, 1987; Semyonov, 1988; rural migrants within the same localistic Xie and Gough, 2011), language used in the network. Thirdly, it can provide migrants workplace (Xie and Gough, 2011) or ethnic with better employment opportunities, industries (Zhou and Logan, 1989). because co-ethnic employers in enclaves According to the original formulation of may value migrants’ pre-migration human the enclave thesis, employer-based mea- capital more than employers in the open sures are preferred. Besides problems in economy. Reflecting on these three benefits, measurement, another shortcoming of pre- our research addresses three corresponding vious enclave studies is that they seldom research questions. ask what characteristics of migrants/immi- First, are migrant workers with low grants may be associated with participation human capital more likely than other in enclave economies. Enclave participation migrants to find employment in enclave can be selective. If ethnic enclaves are firms? Some migrant workers may lack ade- attractive only to immigrants (or migrants) quate skills, such as speaking Mandarin whose skills are too limited for employ- Chinese, to be competitive in the urban ment in the open economy, their earnings open labour market. By using ties with in enclave economies should also be limited people from the same place of origin, how- by their lack of skills. In this case, however, ever, they may find employment within we cannot conclude that there is no enclave enclaves. This beneficial aspect of enclaves effect, since workers who seek shelter in an focuses on their protective function for enclave would face additional disadvantages weaker workers. For this group, the pri- if they had moved into the open economy. mary concern is employment, rather than This paper attempts to contribute to the the level of earnings or returns to human enclave literature by studying the effects of capital. Motivated by this question, we a localistic enclave on the labour force out- examine what characteristics of migrant comes of migrant workers in urban China. workers may predict their participation in Our method of achieving this was to devise enclave economies. If an enclave is a shelter some innovative items on a 2010 social for the weak, a migrant worker’s human survey of migrant workers in nine cities in capital should be negatively associated with the Pearl River delta and 10 cities in the the likelihood of working in an enclave.

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Secondly, do migrant workers employed second option is that co-ethnic employers in enclave firms enjoy overall higher earn- may find the pre-immigration human capital ings than migrant workers employed in of immigrants valuable (Light, 1984; Portes non-enclave firms? Social networks based and Bach, 1985; Portes and Jensen, 1987, on kinship, friendship or cultural identifi- 1989; Waldinger, 1987). We borrow the same cation are known to be important in trans- reasoning in our study of the effects of loca- mitting valuable information and resources listic enclaves for rural migrants in China and thus facilitating economic activities and propose that working in an enclave may (Burt, 1992; Coleman, 1988; Granovetter, yield a higher return on migrants’ human 1973; Lin, 2001; Portes, 1998). A localistic capital, regardless of whether or not their enclave in China behaves in the same way, overall earnings are higher. In contrast with as it contains dense networks connecting our second research question, which con- rural migrants of the same origin. Wang cerns the main effect of enclave participation, (1995) attributes Zhejiang migrants’ com- the third question aims to test the interactive petitiveness in the apparel industry in effect of enclave participation and human Beijing to their migrant community, where capital. We expect that migrant workers in information about the industry spreads localistic enclaves enjoy better opportunities quickly. Lee (1998) describes concentra- because co-ethnic employers value their pre- tions of migrant workers of the same origin migration education, training and work in certain factory positions with relatively experience more highly than their counter- high wage rates because their foremen parts in the open economy. intentionally assigned these positions to workers who share their own places of origin. If an enclave acts as a network Research Design mechanism channelling information and resources as expected, the overall effect of The data used in this study come from a 1 working in an enclave should be positive. social survey of rural migrants. In this Thirdly, are the earnings returns to survey, we designed a few items to measure human capital for migrant workers higher the ethnicities of both employers and co- in enclave firms than in non-enclave firms? workers. We construct two measures of Another beneficial aspect of an enclave is its enclave participation from these survey potential protective effects against devalua- items. tion of pre-immigrant human capital pos- The survey interviewed migrant workers sessed by immigrants in the open economy. in nine cities in the Pearl River delta and ten Due to discrimination and/or low transfer- cities in the Yangzi River delta.2 Since a sam- ability of pre-migration skills, the human pling frame of migrant workers was unavail- capital that immigrants had acquired prior to able, quota sampling was applied, using the immigration (i.e. education, language, skills) quota calculated from official statistical may be discounted in the labour market of yearbooks.3 Migrant workers were screened the host society (Friedberg, 2000; Zeng and as persons who were rural hukou holders, Xie, 2004). To catch up with the natives, without college education, having experi- immigrants either accumulate additional enced cross- or within-province migration human capital in the host society or work and being employed fulltime. initially in enclaves (Akresh, 2007; Duleep To address the three research questions and Regets, 1999; Friedberg, 2000; Hu, 2000; posed earlier, we conduct the statistical anal- Xie and Gough, 2011). One reason for the yses of the survey data in three stages. In the

Downloaded from usj.sagepub.com at UNIV OF MICHIGAN on April 15, 2013 MIGRANT WORKERS IN CHINA 7 first stage, the dependent variable is an indi- respondent. For the second operationalisa- cator of whether or not a migrant worker is tion, enclave participation is defined as employed in an enclave economy—i.e. more than 50 per cent of the respondent’s enclave participation. Independent variables co-workers sharing the same place of origin include the level of human capital and per- as the respondent. Because the meaning of sonal characteristics of migrant workers, as localistic co-ethnicity varies by context well as measures of social ties and contextual (Lee, 1998), we define the boundaries of factors. The dependent variable in the localistic enclaves flexibly, depending on second stage is the natural logarithm of both the place of origin and the place of monthly income. We assess the main effect destination. For cross-provincial migrants, of enclave participation on earnings net of the co-ethnic in-group boundary for the human capital, personal characteristics and operationalisation of enclaves is defined at work-related factors. The third stage is an the province level. For cross-city/county extension of the stage-two analysis, with migrants within a province, the co-ethnic interaction terms of enclave participation in-group boundary is defined at the city/ and human capital variables added to test county level. For migrants within a city/ whether human capital yields higher earn- county, the co-ethnic in-group boundary is ings returns in enclaves. further reduced to the village level. From Enclave participation is a key variable in these procedures, we obtain two dichoto- our study. We construct two measures of mous variables for two alternative measures enclave participation from three survey of enclave participation—i.e. employer/ questions: supervisor-based and co-worker-based, coded 1 if yes and 0 if no. (1) ‘‘Does your current employer come In the first-stage analysis, we address the from the same place of origin as first research question by estimating logistic yourself?’’ models for enclave participation, separately (2) ‘‘Does your direct supervisor in your for the two alternative measures. Personal workplace come from the same place characteristics include gender and age at the of origin as yourself?’’ time of entering current job. Level of (3) ‘‘Are more than 50 per cent of co- human capital is measured by years of workers in your workplace from the schooling and years of prior work experi- same place of origin as yourself?’’ ence. We obtain the years of prior work experience by subtracting beginning year of Here, ‘place of origin’ is defined at three the first urban job from year of entering the levels: the village level, the county/city level current job. We measure a migrant worker’s and the provincial level. If respondents prior connection to an enclave by whether answered that the employer, the direct or not the current job was acquired by supervisor or over 50 per cent of their using kinship or friendship ties, coded 1 if co-workers in the workplace are their yes and 0 if no. We include two contextual co-ethnics, they are further asked about the factors in the study. One contextual variable nature of the co-ethnicity in terms of the is the geographical location of the firms at same village, the same county/city or the the province level: Jiangsu, Zhejiang, same province. Our first operationalisation Guangdong and Shanghai. Another contex- of enclave participation requires that both tual variable is concerned with the origin the employer and the direct supervisor be province of migrants. We conjecture that from the same place of origin as the the origin province affects enclave

Downloaded from usj.sagepub.com at UNIV OF MICHIGAN on April 15, 2013 8 CHUNNI ZHANG AND YU XIE participation mainly through the prevalence 1996), but enclave firms are underrepre- of migrants from an origin province. This is sented among large firms. Variables for the because an enclave is unlikely to evolve if the third-stage analysis are the same, except migrant population from an origin is too that interaction terms between enclave par- small. However, it is also possible that ticipation and human capital variables are enclaves are less socially significant and thus added to the analysis. less protective if the migration population After deleting cases with missing values, from a province is very large. Thus, instead we have a sample of 3303 migrant workers of origin-specific fixed effects, we include in from the survey. We present the descriptive our analysis a measure of the relative size of statistics of the variables in the Appendix. out-migration from each province. We uti- lise data from the 2010 China population census to construct proportions of the Results migrant population from each origin prov- ince over the total migrant population resid- In Table 1, we present the results of the first ing in each destination province.4 stage of analysis to address the first research In the second and third stages, we esti- question. Logistic coefficients (in both orig- mate OLS regression models with the inal and exponentiated forms), standard dependent variable being the natural loga- errors of logistic coefficients and statistical rithm of monthly income. In stage two, we significance for the null hypothesis of the use the two alternative measures of enclave logistic coefficients being zero are given. A participation as the key explanatory vari- positive logistic coefficient indicates that its able. Other independent variables are corresponding variable increases the likeli- human capital variables and variables of hood, measured in log-odds, of working in personal and job characteristics. The level an enclave, and vice versa. The exponen- of human capital of migrant workers is tiated form can be interpreted in terms of measured in terms of three aspects: formal its multiplicative effect on the odds of education, work experience and occupa- enclave participation. In model 1, we use tional skills. Formal education is measured the employer/supervisor-based definition of by years of schooling. Work experience is enclaves. In model 2, we use the alternative, measured by years of urban work since co-worker-based definition. initiation of rural-to-urban migration. We From the table, we observe that our mea- include a squared term of work experience sures of localistic networks strongly affect to capture its curvilinear effects on the enclave participation. Finding employment dependent variable. Occupational skills are at the current job through kinship or friend- measured by whether migrant workers ship ties increases the odds of participating obtain any occupational certificates, with in an employer/supervisor-based enclave by no occupational certificates as the reference 3.7 times and in a co-worker-based enclave category. We also measure migration his- by 1.9 times. Concerning gender difference, tory with a variable indicating whether the men are significantly more likely than migrant is the first-time migrant. We con- women to work in employer/supervisor- trol for the size of the firm, which is an based enclaves, but not in co-worker-based ordered variable, and the geographical loca- enclaves. Age has almost no effect on enclave tion at the province level. The firm size is participation. included because a larger firm could offer Confirming our expectation regarding better earnings (Kalleberg and van Buren, enclaves as a shelter for the weak, measures

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Table1. Logistic regression on enclave participation (N = 3303) Variables Model 1: employer-based Model 2: co-worker-based b exp (b) b exp (b)

Male 0.513** 1.670 0.164 1.178 (0.153) (0.110) Years of schooling 0.025 1.025 20.092** 0.912 (0.031) (0.024) Age when got current job 0.009 1.009 20.002 0.998 (0.009) (0.007) Work experience before current job 20.004 0.996 20.008 0.992 (0.014) (0.010) Destination Shanghai 0.258 1.295 0.228 1.256 (0.216) (0.163) Jiangsu 20.541* 0.582 0.025 1.025 (0.245) (0.166) Zhejiang 20.169 0.845 20.074 0.929 (0.206) (0.148) Prevalence rate of migrants 0.012 1.012 20.010* 0.990 (0.006) (0.005) Find job via kinship/friendship ties 1.324** 3.760 0.636** 1.889 (0.171) (0.112) Constant 24.408** 0.016 21.301** 0.342 (0.473) (0.340)

Log likelihood 2742.52047 21203.2221 LR chi2 94.71 71.29 Degrees of freedom 9 9

Notes: numbers in parentheses are standard errors. * p \0.05; ** p \0.01. Omitted variables as the reference category are: female, Guangdong as the destination, finding job through market or other channels. of human capital generally have negative province are less likely to work in employer/ effects on enclave participation. Years of supervisor-based enclaves than those in schooling significantly lower the likelihood Guangdong.5 Interestingly, migrant workers of working in an enclave defined by the eth- from a place of origin with a larger migrant nicity of co-workers, but this effect is insig- population in the destination province are nificant if we use the measure of enclaves more likely to participate in employer/ based on the employer/supervisor’s ethni- supervisor-based enclaves,6 but less likely to city. Years of prior work experience slightly participate in co-worker-based enclaves. reduce the likelihood of enclave participa- This suggests different processes at work for tion, but the effect of this variable is not sta- the two types of enclave: a localistic ethnic tistically significant in either model. population fosters the employment of the Contextual factors also affect enclave group by firms owned by co-ethnic entre- participation. Migrant workers in Jiangsu preneurs, but the social bond due to a

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Table 2. OLS regression on log monthly wages in additive models (N = 3303) Variables Model 3: employer-based Model 4: co-worker-based b S.E.(b) b S.E.(b)

Male 0.198** 0.012 0.199** 0.012 Age 20.007** 0.001 20.007** 0.001 Years of schooling 0.026** 0.003 0.027** 0.003 Work experience 0.043** 0.003 0.043** 0.003 Work experience2 20.001** 0.000 20.001** 0.000 Certificate 0.071** 0.017 0.070** 0.017 Firm size 10–29 persons 0.094** 0.030 0.083** 0.030 30–99 persons 0.115** 0.028 0.101** 0.028 100–299 persons 0.124** 0.027 0.109** 0.027 300–999 persons 0.161** 0.027 0.146** 0.027 1000–2999 persons 0.168** 0.029 0.153** 0.029 Above 3000 persons 0.203** 0.030 0.188** 0.029 First job 0.062** 0.014 0.063** 0.014 Destination Jiangshu 20.068** 0.022 20.067** 0.022 Zhejiang 20.024 0.022 20.024 0.022 Guangdong 20.115** 0.019 20.113** 0.019 Enclave 0.096** 0.024 0.065** 0.018 Constant 6.996** 0.046 6.999** 0.046

R2 0.227 0.227

Notes: * p \0.05; ** p \0.01. Omitted variables as the reference category are: female, do not have occupational certificates, firm size below 10 persons, not the first job, Shanghai as the destination, and not in an enclave firm. common localistic ethnic identity may well We observe a positive and significant be stronger when the ethnic population in a coefficient of enclave participation in both destination is smaller. This may explain the model 3 and model 4, confirming the bene- observed negative effect of the prevalence ficial effect of working in enclaves. After rate of migrants on participation in localis- controlling for other variables, working in tic enclaves defined by a high concentration an employer/supervisor-based enclave of co-ethnic co-workers. increases monthly income by 10 per cent We now shift to addressing the second and working in a co-worker-based enclave research question by assessing the labour increases monthly income by 6 per cent. market outcome of enclave participation. In An overall beneficial effect of enclave Table 2, we present the results of the second participation, however, does not answer stage of analysis—testing the overall effect our third research question. We next exam- of enclave participation on logged monthly ine how earnings returns to human capital income. Models 3 and 4 are parallel models, vary by whether migrant workers work in with two alternative measures of enclave enclaves or the open economy. For this participation. purpose, we present models 5 and 6 in

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Table 3, which are interactive models with the latter, co-worker-based enclaves are interaction terms between enclave partici- usually within relatively large firms. These pation and three human capital variables. firms mainly use the native-place network Model 5 is an extension of model 3, with of employees to recruit cheap labour to fill an employer/supervisor-based measure of in labour-intensive manual jobs that do not enclaves. Model 6 is developed from model reward human capital. 4, with a co-worker-based measure of enclaves. Among interaction terms in model 5, only enclave 3 work experience Conclusion has a significant positive effect, indicating that earnings returns to work experience Are localistic enclaves beneficial to migrant are slightly higher in employer/supervisor- workers in China? Our answer is a qualified based enclaves than in the open economy. yes. We reached this conclusion through sta- In model 6, the only significant interaction tistical analyses of survey data collected in term is enclave 3 schooling, but the effect is 2010 on migrant workers in the Pearl River unexpectedly negative, suggesting that the and Yangzi River deltas. The analyses capita- earnings return to schooling in co-worker- lised on two alternative operationalisations based enclaves is even lower than in the of localistic enclaves based on whether the open economy. Taken together, however, it employer/supervisor came from the same seems that enclave participation does not place of origin as the migrant worker, and systematically affect earnings returns to on whether a majority of co-workers came human capital. from the same place of origin as the migrant Earlier, in discussing results reported in worker. Table 1, we observed the differences Our study yields three concrete findings. between the two alternative measures of First, there is some evidence in support of localistic enclaves. The interaction models 5 the sheltering hypothesis that localistic and 6 shown in Table 3 now shed addi- enclaves characterised by concentrations of tional light on the importance of using the co-workers from the same places of origin two different measures of enclaves. It provide employment opportunities to appears that when the employer/supervisor migrant workers who would otherwise have is from the same place of origin as the difficulties competing in the open economy. migrant workers, the enclave offers more Secondly, migrant workers in localistic opportunities to migrant workers because enclaves overall enjoy higher earnings than their human capital is valued more. These their counterparts in the open economy. results suggest differences between localistic Thirdly, earnings returns to human capital enclaves defined by employer/supervisor’s do not differ much by enclave participation. ethnicity versus localistic enclaves defined The second finding lends support to the by co-workers’ ethnicity. In the former, cer- ‘enclave thesis’ in the literature on immi- tain migrant entrepreneurs may favour co- grants’ experiences in the US—i.e. immi- ethnic migrant workers from the same grants benefit from working in ethnic places of origin and are able to act on their enclaves (Portes and Bach, 1985; Portes and favouritism through their power in the rela- Jensen, 1987). While several earlier works tively small firms they own and/or manage. have found no empirical evidence in sup- In addition, such employers are likely to port of this thesis (for example, Nee et al., specialise and thus are able to utilise the 1994; Sanders and Nee, 1987; Xie and human capital of the co-ethnic group.7 In Gough, 2011), these studies have the

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Table 3. OLS regression on log monthly wages in interaction models (N = 3303) Variables Model 5: employer-based Model 6: co-worker-based b S.E.(b) b S.E.(b)

Male 0.198** 0.012 0.200** 0.012 Age 20.007** 0.001 20.007** 0.001 Years of schooling 0.027** 0.003 0.028** 0.003 Work experience 0.043** 0.003 0.042** 0.000 Work experience2 20.001** 0.000 20.001** 0.000 Certificate 0.064** 0.017 0.072** 0.018 Firm size 10-29 persons 0.098** 0.030 0.083** 0.030 30-99 persons 0.118** 0.028 0.104** 0.028 100-299 persons 0.127** 0.027 0.111** 0.027 300-999 persons 0.162** 0.027 0.147** 0.027 1000-2999 persons 0.168** 0.029 0.154** 0.029 Above 3000 persons 0.203** 0.030 0.189** 0.029 First job 0.064** 0.014 0.062** 0.014 Destination Jiangshu 20.069** 0.022 20.072** 0.022 Zhejiang 20.023 0.022 20.025 0.022 Guangdong 20.113** 0.019 20.116** 0.019 Enclave 0.156 0.102 0.167* 0.078 Enclave 3 experience 0.009** 0.003 0.005 0.003 Enclave 3 certificate 0.092 0.000 20.038 0.000 Enclave 3 schooling 20.015 0.009 20.015* 0.007 Constant 6.985** 0.047 6.987** 0.047

R2 0.230 0.229

Notes: * p \0.05; ** p \0.01. Omitted variables as the reference category are: female, do not have occupational certificates, firm size below 10 persons, not the first job, Shanghai as the destination, and not in an enclave firm. limitation of using relatively poor measures the US. However, it has been found that of ethnic enclaves. To overcome this meth- the returns to Arabs’ schooling in Israel are odological difficulty, we collected richer higher in Arab enclaves than in the open information on workplace in the 2010 economy (Semyonov, 1988; Lewin-Epstein survey and constructed two measures of and Semyonov, 1994). This benefit is rea- localistic enclaves based on the characteris- lised by minorities (Arabs in this case) fill- tics of the workplace. ing high-status, well-paid positions in an The third finding of no higher returns to independent and specialised labour market human capital in enclaves than in the open for products and services based on ethnic economy does not surprise us. Similar tastes. In contemporary urban China, as in results were reported by Xie and Gough the contemporary US, however, localistic (2011) for the experiences of immigrants in enclaves mainly offer low-status, manual

Downloaded from usj.sagepub.com at UNIV OF MICHIGAN on April 15, 2013 MIGRANT WORKERS IN CHINA 13 jobs that are not qualitatively different longer enjoy benefits working in localistic from comparable jobs in the open econ- enclaves. omy. Moreover, there is an insufficient demand for products and services specifi- Acknowledgements cally tailored for native-place ethnicities. In Data analysed in this paper were collected by the such enclaves, ethnic-specific human capi- research project ‘Protecting Rights of Migrant tal is not highly rewarded. Workers: Theories and Practices’ (09JZD0032), Our study highlights once again the social sponsored by the Philosophy and Social Science significance of place of origin for broad Foundation from the China National Ministry of issues such as urbanisation, discrimination Education. This research project was directed by and social inequality in today’s China. As Professor Liu Linping, Department of Sociology, Honig (1992) stated, internal migrations in University. The authors appreciate the China’s past were always organised by ethni- assistance of the institutions and individual cities based on place of origin. It has been aforementioned in providing data. proposed that native-place ethnicity has re- emerged mainly for cultural reasons (Ma Funding and Xiang, 1998). Our work shows instead This research received no specific grant from any the practical utility of native-place ethnicity, funding agency in the public, commercial or not- as migrant workers derive economic benefits for-profit sectors. from localistic enclaves. In other words, the reliance of migrants on ties and enclaves Notes may well reflect their rational responses to 1. See Acknowledgements for further details. unfavorable opportunities and regulations 2. More specifically, the nine cities in the Pearl they face in the urban open labour market. River delta are Guangzhou, Shenzhen, Regardless of their cultural values, localistic Zhuhai, Foshan, Zhaoqing, Dongguan, enclaves do have economic value to migrant , Zhongshan, and Jiangmen. The workers. ten cities in the Yangzi River delta are Our finding that rural migrants benefit Shanghai, Nanjing, , , from working in localistic enclaves suggests , , Hangzhou, Ningbo, that rural migrants working in the open Jiaxing, and Shaoxing. 3. The survey was conducted during the economy are subject to experiencing poten- summer of 2010. The interviewers were col- tial discrimination. Thus, one policy impli- lege students in Guangzhou, Shanghai, cation from this study is the need for urban Nanjing and Hangzhou. They located eligible governments to provide a fair employment respondents in labour-intensive firms and environment to all workers, perhaps by migrant communities. Among migrants who removing the institutional barriers between were interviewed, 98 per cent in the Pearl rural and urban hukou holders, and River delta and 97 per cent in the Yangzi between local and non-local hukou holders. River delta completed the questionnaire. Removing institutional barriers will offer 4. Data are obtained from Population Census rural migrants better employment opportu- Office, 2012, Tables T8-03 and T1-04. 5. The Pearl River delta and Yangzi River delta nities in the open economy as well as are different in many aspects, such as indus- opportunities of assimilation to urbanites trial structure, source of investment and economically, socially and culturally. When composition of migrant labour. To examine migrant workers are no longer disadvan- potential differences in results between the taged in the open economy, they will no two destination regions, we also included an

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interaction term between region and enclave Duleep, H. O. and Regets, M. C. (1999) Immi- participation but did not find the enclave grants and human-capital investment, The effect to vary significantly by region. In American Economic Review, 89, pp. 186–191. region-specific models, we found the esti- Florence, E. (2006) Debates and classification mated effect of participation in an struggles regarding the representation of employer/supervisor-based enclave to be migrant workers, China Perspectives, 65, 0.079 (S.E. = 0. 033) for the Pearl River delta online (http://chinaperspectives.revues.org/ and 0.120 (S.E. = 0.036) for the Yangzi River 629; accessed 15 August 2012). delta. The estimated effect of participation in Friedberg, R. M. (2000) You can’t take it with a co-worker-based enclave is 0.077 (S.E. = you? Immigrant assimilation and the port- 0.025) for the Pearl River delta and 0.055 ability of human capital, Journal of Labor Eco- nomics, 18, pp. 221–251. (S.E. = 0. 025) for the Yangzi River delta. Granovetter, M. S. (1973) The strength of weak 6. The effect of prevalence rate of migrant pop- ties, American Journal of Sociology, 78, pp. ulation is marginally significant in employer/ 1360–1380. supervisor-based enclave participation (coe- Honig, E. (1992) Creating Chinese Ethnicity: ficient/S.E. = 1.91, p = 0.056). Subei People in Shanghai, 1850–1980. New 7. We have no direct information about what Haven, CT: Yale University Press. kinds of products and services were offered Hu, W.-Y. (2000) Immigrant earnings ass- and where they were sold by the firms, but it imilation: estimates from longitudinal data, is possible that employer/supervisor-based The American Economic Review, 90, pp. enclaves are firms more likely to conduct 368–372. business transactions with their native places Kalleberg, A. L. and Buren, M. E. van (1996) Is or co-ethnic migrant communities. If true, bigger better? Explaining the relationship this may be the reason why migrants in these between organization size and job rewards, kinds of enclave are more likely to have their American Sociological Review, 61, pp. 47–66. experience rewarded. Lee, C. K. (1998) Gender and the South China Miracle: Two Worlds of Factory Women. Ber- keley, CA: University of California Press. References Lewin-Epstein, N. and Semyonov, M. (1994) Sheltered labor markets, public sector Akresh, I. R. (2007) U.S. immigrants’ labor employment, and socioeconomic returns to market adjustment: additional human capital education of Arabs in Israel, American Jour- investment and earnings growth, Demogra- nal of Sociology, 100, pp. 622–651. phy, 44, pp. 865–881. Liang, Z. (2001) The age of migration in China, Bonacich, E. (1987) ‘Making it’ in America: a Population and Development Review, 27, pp. social evaluation of the ethics of immigrant 499–524. entrepreneurship, Sociological Perspectives, Light, I. (1984) Immigrant and ethnic enterprise 30, pp. 446–466. in North America, Ethnic and Racial Studies, Burt, R. S. (1992) Structural Holes: The Social 7, pp. 195–216. Structure of Competition. Cambridge, MA: Lin, N. (2001) Social Capital: A Theory of Social Harvard University Press. Structure and Action. New York: Cambridge Cole, J. H. (1996) Competition and cooperation University Press. in late imperial China as reflected in native Liu, L. (2002) Guan xi, she hui zi ben yu she hui place and ethnicity, in: G. Hershatter, E. zhuan xing: Shenzhen Pingjiang Cun yan jiu Honig, J. N. Lipman and R. Stross (Eds) [Social ties, social capital and social transi- Remapping China: Fissures in Historical Ter- tion: a study of Pingjiang Cun in Shenzhen]. rain, pp. 156–163. Stanford, CA: Stanford Beijing: China Social Sciences Press. University Press. Ma, L. J. C. and Xiang, B. (1998) Native place, Coleman, J. S. (1988) Social capital in the cre- migration and the emergence of peasant ation of human capital, American Journal of enclaves in Beijing, The China Quarterly, Sociology, 94, pp. S95–S120. 155, pp. 546–581.

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Appendix

Table A1. Summary of variables (N = 3303)

Mean S.D. Percentage Log monthly wage 7.476 0.376 Enclave defined by employer/supervisor 0.064 0.246 Enclave defined by co-workers 0.124 0.330 Male (female = 0) 0.536 0.499 Age 30.211 9.615 Age when got current job 26.225 8.720 Years of schooling 9.860 2.582 Work experience (years of urban work) 7.998 6.530 Work experience before current job 4.556 5.692 Certificate (do not have = 0) 0.162 0.368 First job (not = 0) 0.324 0.468 Find job via kinship/friendship ties (Find job via 0.500 0.500 market/other channel = 0)

Firm size Below 10 persons 5.92 10–29 persons 9.55 30–99 persons 16.10 100–299 persons 23.09 300–999 persons 20.59 1000–2999 persons 12.74 Above 3000 persons 12.01

Destination Shanghai 11.24 Jiangsu 20.21 Zhejiang 17.96 Guangdong 50.60

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