Occupational attainment and stratification in China: The interactive effects of social networks and the hukou system

This paper examines the effects of social networks and hukou status on worker's occupational attainment in China. To identify the potential ranking of different occupations, we consider the use of the stereotype ordered regression model to estimate individual occupational choice. Our results show that social networks play different roles in shaping occupational outcomes for urban and rural workers. In particular, friendship ties significantly improve urban workers' opportunities in obtaining higher-ranked occupations; in contrast, kinship ties appear to be more influential for rural migrants, but the effects are limited to the attainment of lower-ranked occupations. While social contacts from government organizations or state-owned sectors facilitate urban workers' attainment of higher-ranked occupations, similar patterns are not observed among rural workers. We further find that the beneficial effects of social networks or urban hukou identity are stronger for workers who are from less-developed regions, who work in state-owned enterprises, or who have a college degree. Decomposition of the wage gap between urban and rural workers suggests that differences in social networks and occupation types, together with hukou discrimination, account for the majority of the current wage inequality.