Social Capitals And The Wage Levels Of The Farmer Workers

Favor and influence, which penetrate various kinds of socioeconomic activities, typically characterize how things are working in China. Interpersonal relationships, or social capitals, are so important that if neglected, numerous common socioeconomic phenomena will be difficult to understand. Thus, the role of social capitals in Chinese labor market has aroused widespread interests of the economists in recent years, making a lot of achievements. Nevertheless, due to its highly data dependency, several difficulties exist in this field. On one hand, because high quality micro data are difficult to obtain, the majority of the existing literature hasn’t (convincingly) solved the endogeneity problem, thus failed to establish the causal effects of social capitals, which makes the estimation results of many studies lack credibility. This is one of the main reasons that differentiate the results of the same research topic. On the other hand, for the same reason, the proxy variables of social capitals in the existing literature tend to be single, and the robustness of the conclusions are not guaranteed. Therefore, results from one paper cannot necessarily be generalized to other related researches. And what’s more, when the impact social capitals has on job characteristics is involved, the results are more often than not obtained based on informal examination or improper estimation. This lack of rigorousness makes the results questionable, which entails further study in this field.The main task of this thesis is to explore the impact that social capitals may has on the wage levels of the farmer workers, and I attempt to overcome all three difficulties mentioned above in my thesis. Generally speaking, there exists three possible methods to identify causal relationships, i.e. panel data analysis, twin studies, and instrumental variables estimation, and all these three approaches have specific requirements for data, thus making the causal effects identification a nuisance. Fortunately, I have found several very suitable instrumental variables for social capitals in my data, so that I can deal with the endogeneity problem elaborately. Subsequently, I construct five social capital variables, which can be divided into three types of social capitals, so that we can verity the robustness of the results. Finally, as a complement, I formally examined the impacts social capitals have on work types and work places to obtain more reliable conclusions.Specifically, employing a2008survey data sample from Center for Chinese Agricultural Policy of Chinese Academy of Sciences (CAS) which covered619China rural families in four provinces (Shandong, Shaanxi, Jilin and Zhejiang), this thesis empirically analyses the impacts that the three dimensions of social capitals, i.e. government network, market network and dining network, have on wage levels, work types and work places of the farmer workers in the urban labor market. We find that, social capitals only have very limited impact on the wage levels of the farmer workers on the whole. However, social capitals are not useless, because we also find that certain types of social capitals can change the job characteristics (especially work types) of the farmer workers, thus indirectly increasing their wages. The farmer workers should construct new and heterogeneous social capitals in the urban labor market to improve their economic welfare. To deal with the estimation bias caused by the potential endogeneity of social capitals, this thesis utilizes four valid instrumental variables-Old revolutionary base areas, sent-down educated urban youths, most popular surnames in the village and harmonious degree of the village, to obtain consistent estimates, thus establishing causal effects of social capitals. All three difficulties mentioned above are overcome in this study, which is the innovation point of the thesis. We obtain the impacts social capitals have on the wage levels, work types and work places of the farmer workers with more rigorous estimation, which is not only conducive to the understanding of the economic effects of social capitals, but also provides a channel that social capitals affect the wage levels of the farmer workers objectively.