Does guanxi matter to nonfarm employment?

Chinese farmers rely increasingly on nonfarm activities to enhance their incomes. Previous studies identify human capital as a key factor in the selection of workers in the rural nonfarm sector, but these studies ignore the role of social networks, i.e., guanxi. Using data from a detailed household survey in Northeast China, this paper shows that guanxi has a significant impact on an individual's probability of securing a nonfarm job. Different types of guanxi have different effects on the choice of a particular type of nonfarm job. Guanxi plays an important role in channeling labor market information, in particular to younger workers; however, it may also support nepotism and discriminate against those who do not have it. (C) 2003 Association for Comparative Economic Studies. Published by Elsevier Inc. All rights reserved.