deterred from hiring incoming labor even in villages where local wages are high. Other
political costs and social obstacles may affect the ability of firms to hire labor from
outside the village. Lower wages paid to incoming workers may pose a threat to the
wages of village residents or may simply reflect returns to lower skill levels and human
capital endowments. In the next two sections, we address the impact increasing
employment of incoming labor has on local workers’ off-farm employment opportunities
and the nature of demand for rural workers.
Impact on Employment of Local Workers and Local Wages
Rural workers who seek work in urban areas often take low-paid undesirable
work that urban residents are unwilling to do given their favored access to better-paid
state jobs with full benefits (Wang, 1997b). Rural-to-urban migrants and commuters
rarely compete directly with urban residents for jobs. This may or may not be true in
rural areas where village residents do not have the employment guarantees that urban
residents have and where migrants and commuters are less ostracized by local residents
than they are by urban residents.
To examine if and how rural-to-rural migrants and commuters compete with local
workers for scarce off-farm employment opportunities, we selected the 90 villages that
had at least one enterprise employing industrial workers in 1988 and divided the villages
into two groups (table 5). One group is composed of villages in which the proportion of
incoming workers (both in-commuters and in-migrants) in the village industrial
workforce increased between 1988 and 1995. Villages in the other group did not
experience an increase. If incoming workers replace local workers, we should observe
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