Wage Bargaining Power of Internal Migrant Workers: Evidence from Urban Labor Market in China

This study analyses the wage bargaining power of employers and internal migrant workers in the urban labor market in China using a two-tiered SFA model. The findings indicate that bargaining power decreases the observed wage relative to the benchmark wage which is associated with worker's actual productivity. The availability of migrant labor is identified to be a key variable in the wage bargaining process. This study reveals that the migrant workers who obtain jobs via informal job search methods stand in a weak bargaining position relative to those using formal search methods which is consistent with limited choices hypothesis. Additionally, the migrant workers in the manufacturing and construction industries or producing and processing occupations extract surplus nearly identical to other groups. This study analyses the wage bargaining power of employers and internal migrant workers in the urban labour market in China using a two-tiered Stochastic Frontie model. The findings indicate that bargaining power decreases the observed wage relative to the benchmark wage which is associated with worker's actual productivity. This study reveals that the migrant workers who obtain jobs via informal job search methods stand in a weak bargaining position relative to those using formal search methods. Additionally, the migrant workers in the manufacturing and construction industries or producing and processing occupations have similar standard identical to other groups. A conducive working condition, attractive wage offer, and strong employment protection should be considered to retain a consistent supply of internal migrant workers. Additionally, policymaker should review and strengthened existing discrimination law against minority group to reduce subjective and prejudice element in employment.