1. Industrial Transfer, Migrants Flow and Wage Difference Li Qin South China Agricultural University

2. Outline Background and motivation Objectives Methods Data Results and Conclusions

3. Background: Industry Transfer Due to the rising costs of various factors, labor-intensive industries transfer from coastal areas to central, western and other underdeveloped areas. For example, Guangdong Province has stepped up the pace to transfer some industries to Hunan Province. As a result, there were 2,795 industrial transferring projects undertaken by Hunan Province in 2010. Jiangsu Province also strengthened the cooperation between its north and south areas. In 2010, North of Jiangsu Province undertook 2,175 transferring projects by the South, with a total investment of about 176 billion RMB.

4. With industries transferring to central and western China, more and more migrant workers are moving back to less developed areas in central and western regions. According to the National Bureau of Statistics, the number of migrant workers in east coastal areas in 2009 fell 8.9% compared to 2008, while the number in the central region increased by 6.18 million over 2008, with an increase of 33.2%. Studies have shown that, in the future, there will be more rural labor force flowing to inland than that flowing to eastern coastal areas (Cai et al, 2009). Background: Migrants Flow

5. Questions Industry transfer will inevitably bring to the reallocation of labor sources, we want to know: Which kind of migrant workers tends to flow to less developed regions? What is the wages level of migrant workers flowing to less developed areas? Is there wage gap between unless developed areas and developed areas? What determinants cause these differences?

6. Literatures(I) Rural to Urban. Early studies tend to focus on the mobility process of migrant workers from rural to urban areas (Zhao, 1997; Cheng et al, 2006). Urban to Rural. Because of migrant workers’ unemployment in the cities, job insecurity, their children having difficulties going to urban schools, more migrant workers tend to return home. For example, Liang and Wu (2003) shows that migrant workers that are older and with lower level of education are more likely to return home. Wang and Fan (2006) also give some evidence that those with high level of skills and adaptive to urban life are more likely to stay in the city rather than return home.

7. Literatures(II) Urban to Urban. As the development of modern communications equipment and information sharing, as well as migrant workers’ awakened awareness to protect their rights and interests, it is difficult for them to stay in one place for a long time. They often flow and change jobs between different cities instead of returning home (Li, 1999; Yan, 2006; Liu et al, 2006). Although the above studies pay attention to the flow of migrant workers between cities, they often focus on parallel cities, that is, cities with similar level of economic development or cities or enterprises providing similar wages. Few studies are concerned about migrant workers’ flow from developed areas to underdeveloped areas under the background of industry transfer.

8. In fact, with the transfer of industries, many migrant workers gradually flow and change their jobs from the cities in developed areas to cities in less developed areas, but their mobility behavior is not equivalent to flowing back to their home. However, there are few studies in this regard. Only the empirical study of Guo et al (2011) analyzes of the mobility behavior of migrant workers under the background of industrial transfer.

9. Objectives Analyze which kind of migrant workers tends to flow to less developed regions. Set two wage equations of migrant workers in industry transfer-out regions and industry transfer-in regions, and analyze the wage difference of migrant workers in these two regions.

10. Methods

11. Wage Decomposition

12. Data The data used in this study is from the United Nations Working Group on Social Gender and Guangdong Provincial Women's Federation, completed in Guangdong Province in 2010. Guangdong Province, with unbalanced economic development, its regional income shows great inequality. Pearl River Delta (including nine cities), located in central part of Guangdong Province, is a main area that migrant workers flow in, while west and north Guangdong is underdeveloped areas. Since May 2008, industrial transfer and labor transfer policy has been implemented through Guangdong Province. Some industries in Pearl River Delta are transferred to east, west and north of Guangdong and some rural labor are transferred to cities and the secondary, tertiary industries.

13. Data The survey involved six regions. Industrial transfer-out regions (Shenzhen, Dongguan and Foshan) ;Industrial transfer-in regions (Qingyuan, Heyuan and Huizhou) By the method of PPS (Probability Proportional to Size), some Industrial Transfer Park were randomly selected from six regions, and a certain number of factories were selected from each Industrial Transfer Park, and then not more than 20 workers were selected from each factory to complete a questionnaire survey. 2,100 questionnaires were distributed and 1,873 valid samples were obtained for this analysis.

14. In industrial transfer-in regions, more than 50 percent of migrant workers are come from cities where survey located. But in industrial transfer-out regions, only about 20 percent are come from cities where survey locate. In the whole, In industrial transfer-in areas, more than 66 percent of migrant workers come from Guangdong province, but in industry transfer-out area, more than 60 percent are from outside Guangdong province. Both in industrial transfer-in regions and transfer-out regions, migrant workers from Hunan province accounted for most. Followed by migrant worker from Hubei and Henan province. It shows the role of “proximity effect”. Table 1 Distribution of Household Registration Residence

15. Table 2 Demographic and Employment Characteristics of Migrant Workers Migrant workers in industrial transfer-out areas are more educated than in industrial transfer-in regions. In industrial transfer-out regions, more than 30 percent of migrant workers have a degree of above junior college, but this proportion is only 23.86 percent in transfer-in areas. Migrant workers in industrial transfer-out regions have more work experience and are more trained or have professional qualification certificates compared to migrant workers in industrial transfer-in regions. Finally, there is a significant wage difference between migrant workers from these two regions.

16. Table 3 Working Place of Migrant Worker( Dependent Variable: Working in Transfer-in Regions=1, Otherwise=0) Men are more inclined to work in transfer-in regions. People with higher education level are more likely to work in industrial transfer- out areas. Especially those with a bachelor degree have a 33.5% lower probability to work in industrial transfer-in areas. We also find that people with more work experience will not tend to work in industrial transfer –in areas. One more month of work experience, the probability of working in industrial transfer-in areas will decrease by 0.05 percent point. People who come from outside Guangdong provinces are more likely to work in industrial transfer- out areas.

17. Table 4 Wage Equation Estimation( Dependent Variable: Logarithm of Monthly Wage) There have been a positive correlation between education and wage. But the return rate of education is much higher in industrial transfer-out regions than in industrial transfer-in regions. The reason may be that market economy is more dynamic in developed areas where people can find job much more suitable for them. We also find that there is a positive relationship between registration residence and wage. People who get registration residence in cities will get higher wage in transfer in areas compared to migrant workers in transfer out areas. The reason may be that migrant workers live locally will have greater social capita, which help to improve their wage.

18. Occupational type also affect the wage of migrant worker. But migrant workers who are artisans and shift leaders will get higher wage in industrial transfer-in areas than in industrial transfer-out areas. The probable cause may be that it need higher wage to make migrant work leave developed areas to employ in unless-developed areas. This is similar to the case that foreign companies will pay higher salary to poach skilled people employed in state-owned enterprises. Continued Table 4

19. Table 5 Decomposition of Wage Difference The total characteristic difference explains 90.7% of the wage difference, while coefficient difference explains 9.3% of wage difference. It shows that above 90% of the wage advantage in transfer-out regions are caused by labor structure, human capital characteristics and enterprise characteristics in these two regions, which shows great difference between the labor markets in these two regions. Education plays the greatest role in the wage difference. The characteristic difference of education explains 20.2% of total wage difference, while the return rate difference of education explains 50% of wage difference. The return rate difference of work experience and professional qualification certificate explain 17.1% and 24.7% of wage difference, while occupational type and registration residence narrow the wage gap between these two regions.

20. conclusion Industrial transfer causes new mobility of migrant workers. Unlike the case in the past that a large number of migrant workers worked in big cities located in coastal areas, in the process of industrial transfer, migrant workers have started to flow towards underdeveloped areas. Our results show that migrant workers with lower education and work experience tend to work in unless developed areas. Those from outside Guangdong Province and with high level of education and skills are more inclined to work in developed areas.

21. There is significant difference between migrant workers’ wage in industrial transfer-out and transfer-in areas. The results show that 90% of the wage difference are caused by the difference of labor structure, human capital characteristics and enterprise characteristics in these two regions. The return rate of human resource in transfer-out regions is significantly higher than that in transfer-in regions. This signify that labor market in industrial transfer-out areas is not perfect as the ones in industrial transfer- in areas.

22. Policy implication Although more and more migrant workers are flowing towards underdeveloped areas along with industrial transfer, underdeveloped areas still lack some advantage that owned by developed areas. For instance, more complete labor market, sufficient employment opportunities, as well as opportunities to give various factors corresponding returns. In the process of industrial transfer, underdeveloped areas should continue to improve their infrastructure. For example, attracting more enterprises to settle down, cultivating and developing the labor market; training migrant workers; offering social security and so on.

23. Future research Future research will focus on gender wage gap decomposition under the background of industrial transfer and upgrade. The emphasis is to explore whether the industrial transfer and upgrade will aggravate the gender wage inequality.

24. Thank you for your attention! Comments are welcome! liqin@liqin@scau.edu.cn