Agglomeration In Workplace And Migrant Workers’ Wages In China

The paper aims at exploring the relationship between agglomeration in workplace and migrant workers’ labor market outcomes to complement the insufficient empirical studies; Besides, the paper proposes the logic of collective action mainly based on the Olsen’s theory for migrant workers in China to explain the empirical results above as well as to provide new insights for the studies upon collective actions. Also, the findings aforementioned make some policy implications to construct harmony industrial relations.The empirical results are as follows:the agglomeration in workplace has a positive effect on migrant workers’wages. To be exact, other factors fixed, those migrant workers with fellow villagers in large-scale around increase wages per hour by5.8%in average comparing with other separate workers, the size of which is larger than that by increasing the formal education received by one year, as well as that by signing permanent labor contracts with employers, and is equivalent to the total return of increasing experience by one year. However, compared with the relative income effect above, the absolute income effect owing to the agglomeration in workplace is not significant, economically and statistically. That is to say, the agglomeration in workplace exerts little effect on the return of experience. Further studies upon the relative income effect reveal that migrant workers characterized as Male, Non-local, born in the Middle and West regions, exclusive of labor contract more than one year and the corresponding enterprises characterized as Private ownership, Small-scale, located at the Middle and West regions benefit more from the agglomeration in workplace. Besides, the agglomeration in workplace raises more wages for migrant workers in the middle and upper end of income distribution than those in the middle and lower end, while those in the uppermost and lowermost end of the distribution is an exception. Last but not least, the decomposition of income disparity among two groups explains that no more than30%of the difference can be explained by the disparity with respect to individual characteristics, while the remaining disparities contribute to their different wage mechanism, or wage discrimination.The explanation for the results lies in the fact that those migrant workers who have many fellow villagers in the enterprises are more likely to be in close relationship with each other as well as with more extensive information sharing, subjecting them to collective action more frequently and effectively than otherwise separate workers, offsetting the inferiority owning to lower human capital and institutional block to some extent. When employees engage in the collective bargaining behavior, they are equipped with increasing bargaining powers comparing with employers, thus resulting in an improvement of labor market outcomes. Therefore, migrant workers with many fellow villagers around are more likely to achieve higher wages due to their increasing bargaining power through the collective action. Furthermore, as the improvement in labor market outcomes subjects to their collective bargaining power, or the efficiency of collective action, which is determined by factors such as the initial income, expected benefits, internal information sharing, expected cost and individual share within the total benefits, the disparities in the relative income effect among groups are explainable.Lastly, comparing with the traditional practice of contributing the economic benefits of agglomeration to the improvement of productivity, which makes the policy implications that more agglomerations bring about better economic development, however, the paper explores the relationship between agglomeration in workplace and migrant workers’wages from the perspective of collective action, putting more emphasis on the inferiority of migrant workers, and to diminish and eliminate the institutional discrimination facing them is indispensable to ensure a harmonious industrial relations. To be exact, the paper implies that the living situation of migrant workers can be substantially improved and the probability of taking collective action can be decreased dramatically with more investment on migrant workers’human capital such as job training, the abolition of the household registration system, the equalization of basic public service, and more effective collective bargaining institutions, avoiding high risk of transforming from the previous economic welfare to the non-economic matters such as social justice and civil rights with regarding to the object of collective action.