Research On Employment Issues About Floating Population In Segmented Urban Labor Market Of China

Since the reform and opening up, the operating mechanism of China’s urbanlabor market has experienced a significant change and the size of the floatingpopulation increased significantly. The floating population has become a real part ofthe urban population. In this process, their employment situation has also beenimproved, but some problems, such as low quality of employment, low income levels,weak anti-risk capability, remain widespread. This thesis aims to discusse these issuesunder the framework of labor market segmentation theories.For the purpose of estimating the pattern of the labor market segmentation inChina’s urban labor market, from9variables which represent the human capital,social factors and institutional factors, we choose7variables which have significanteffects on China’s labor market for two-step cluster analysis. The results show thatChina’s urban labor market can be divided into two parts which include the primarylabor market and the secondary labor market. The the main characteristic variables ofthis segmentation pattern is workers’ industry, occupation and income.To analyze the employment condition of the floating population in China’s dualurban labor market, we construct three models to estimate the determinations ofworkers’ occupation, industry and income respectively. And we find that the impactsof labor market segmentation for different types of workers are sasymmetric.Compared with the local residents with the same human capital, the probability of thefloating population entering the monopoly industry and formal labor market is muchsmaller. Labor market segmentation increases the income and the employmentnumber of local people who work in the primary labor market and improve theirworking condition. But for the floating population, the situation is reversed. Labormarket segmentation makes most of the floating population squeezed out of theprimary labor market, and only can stay in the secondary labor market. Their wagesare much smaller and their working situation deteriorates. But the local farmer workers, foreign citizens and foreign farmer workers, which are different groups infloating population, do not have significant differences on the probabilities of enteringthe priamary labor market, despite this, the income of foreign citizens is much higherthan the other groups.Under the effects of income disparities maintenance mechanism in China’s labormarket, the asymmetric impacts of labor market segmentation on local residents andfloating population not only affect the employment situation of the labors in the shortterm, but also have a continuing effect. Therefore, China’s labor market segmentationproduces a permanent impact on the long-term development of the local residents andfloating population in the labor market.In addition, the binary segmentation of China’s urban labor market has anegative influence on social welfare. For the welfare of labors, under the case that thelabor absorptive capacity of monopoly sectors and the formal labor market aresignificantly lower than the open sectors and non-formal labor market, the increase ofthe total welfare of local residents caused by labor market segmentation would bemuch less than the welfare loss of the floating population. Owing to that monopolyindustries in China are concentrated in basic industries, the relationship betweenproducts of monopoly industries and open industry are complementary rather thanalternative. So, for the welfare of enterprise, we can see that the binary segmentationof China’s labor market will not only reduce the production of monopoly industriesproduction, but also hinder the development of other industries in the open industry.Thus, the segementation of urban labor market makes the labor market deviate fromthe optimal path and result in an unnecessary loss of social welfare.At last, in order to predict the employment trends of China’s floating population,a two-sector model is build to describe the supply and demand decision-making offloating population from these two aspects of enterprise employment decisions andmigration decisions of the floating population. By a comparative analysis of thedifferent behavior of enterprises and floating population in a unified labor market andthe binary segmented labor market, we find that labor market segmentation reducefloating population’s net gain of migration. The correlation between the size of floationg population and the degree of labor market segmentation is negative. Withthe development of China’s economic development and the shrinking of regionalincome disparities, the gap between the supply and demand of the floating populationin China’s urban dual labor market will further expand and the phenomenon of "laborshortage" will become more common. But the contradictions among the supply anddemand structure will change. The shortage of skilled workers will be graduallytransformed into a general labor shortage. At the same time, the form of floatingpopulation employment will improve gradually. Contract workers will replace thetemporary and the labor rights protection of floating population will be better.