A Study On The Impact Of The Reform Of The Household Registration System On Urban-rural Integration Of The Labor Market

In 2014,the State Council announced a proposal to further reform the Household Registration System,which was to abolish the legal distinction between agricultural and non-agricultural Hukou and to establish unified household registration system.In 2015,the State Council announced the Interim Regulation on Residence Permits which conditionally grants migrants the access to basic public services and rights in the host cities.From then on,the new household registration system that aims to promote urban-rural integration substitutes for previous household registration system that was accountable for urban-rural segmentation.This unprecedented reform in the labour market is likely to significantly affect labour allocation efficiency.This paper examines,theoretically and empirically,the impact of Hukou reform on the urban-rural integration in the urban labor market.The main research questions are as follows:First,how does the Hukou reform affect the urban-rural integration in the urban labor market?Second,how does the reform affect the rural migrants'employment opportunities?Third,how does the Hukou reform affect rural migrants' wage and social insurance participation?Our work consists of following chapters:Chapter 1 is introduction.Chapter 2reviews the existing literature and particularly sorts out studies with respect to household registration system and labour market integration..Chapter 3 theoretically analyses the impact of the Hukou reform on the urban-rural integration in the urban labor market emphasizing the role of institutional evolution,human capital and social capital in shaping labour market integration.Chapters 4 and 5 empirically test implications above using indicators such as employment opportunity,wage and social insurance participation.Chapter 6 is policy recommendations.The last chapter concludes research limitations of the paper as well as research plans in the future.Main results are as follows:(1)While we should see that the reformed household registration system is vital in reducing Urban-rural segregation,facilitating equalization of public services,removing rural migration obstacles and eliminating labour market discrimination,there are limitations.Urban-rural Identidy segmentation differs from labour market segmentation.Labour market segmentation is not rare even for developed economics.In the case of China,The Huko reform impact on urban-rural integration in the urban labor market is associated with factors in four aspects.First of all,the reform allows all migrants to apply for the residency permit following the same requirements,which subjects migrants with agricultural Hukou to be disadvantaged because agricultural Hukou holders accumulate lower human capitals and are of poor employment given the long-lasting rural-urban segregation in public services.That means the reform is officially equal to but not essentially equal for all migrants and Hukou discrimination towards agricultural Hukou holders still continues;Secondly,there are mobility obstacles preventing most rural migrants who are working in the secondary labor market from moving up to the main labor market.Thirdly,inferior human capitals of rural migrants caused by the long-lasting discriminatory policies not only subjects rural migrants to be disadvantaged in applying for the residency permit but also leaves them to be disadvantaged in employment opportunities in the urban labor market the latter of which couldn't disappear even implementing "essentially equal" Hukou reform;Fourthly,the long-lasting Urban-Rural segregation in public services lead to Urban-Rural social rejection,which which in turn results in lower-quality social network for rural migrants and lower-quality social network subjects rural migrants to be disadvantaged in employment opportunities in the urban labor market.Considering these factors,the paper demonstrates that Hukou reform has not impact on the urban-rural integration in the urban labor market,and "formally equal" Hukou and human capital is both the major factor hindering he Urban-Rural integration in the urban labor market.All these factors are not likely to disappear after the Hukou reform.(2)We use the switching regression model to test the roles of household registration System and human capital in affecting the employment opportunity differences,and findings are as follows:The reform does not promote urban-rural integration in the urban labor market in terms of employment opportunity,Household registration system and human capital are still preventing rural migrants from entering main labor market---Urban workers still dominates the primary sector,while most rural migrants are still working in the secondary sector and In both sectors,rural migrants mostly engage in disadvantaged industries as well as disadvantaged occupations.(3)We use the Blinder-Oaxaca decomposition model to test the role of household registration system and human capital in affecting the wage gap and two social insurance participation differences--pension insurance and medical insurance in the urban labour market and find that our two hypotheses partly.The reform contributed to the Urban-Rural integration in the urban labour market in terms of wage differences but not for the two social insurance participation differences.Difference in human capital is mainly accountable for wage gap while both household registration system and human capital are crucial for wage gap and the two social insurance participation differences.Given all these findings,our paper calls for more efforts to speed up reforms on Hukou system,to strengthen urban labor market integration,and to improve rural migrants,employment opportunities.