Informal search, bad search? : the effects of job search method on wages among rural migrants in urban China / Yuanyuan Chen (Shanghai University of Finance and Economics), Le Wang (University of Oklahoma and IZA), Min Zhang (East China Normal University) ; IZA Institute of Labor Economics
VerfasserChen, Yuanyuan ; Wang, Le ; Zhang, Min
KörperschaftForschungsinstitut zur Zukunft der Arbeit
ErschienenBonn, Germany : IZA Institute of Labor Economics, September 2017
Elektronische Ressource
Umfang1 Online-Ressource (49 Seiten)
SerieDiscussion paper ; no. 11058
 Das Dokument ist öffentlich zugänglich im Rahmen des deutschen Urheberrechts.
Informal search, bad search? [0.46 mb]
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The use of informal job search method is prevalent in many countries. There is, however, no consensus in the literature on whether it actually matters for wages, and if it does, what are the underlying mechanisms. We empirically examine these issues specifically for rural migrants in urban China, a country where one of the largest domestic migration in human history has occurred over the past decades. We find that there exists a significant wage penalty for those migrant workers who have conducted their search through informal channels, despite their popularity. Our further analysis suggests two potential reasons for the wage penalty: 1) the informal job search sends a negative signal (of workers inability to successfully find a job in a competitive market) to potential employers, resulting in lower wages; and 2) there exists a trade-off between wages and search efficiency for quicker entry into local labor market. We also find some evidence that the informal job search may lead to low-skilled jobs with lower wages. We do not find strong evidence supporting alternative explanations.