Health status, earnings and labor mobility in rural China

The migration of rural laborers into cities for employment has been one of the main driving forces of China’s economic growth in decades. Based upon a dataset with 21,753 observations collected by the Ministry of Agriculture of China over the five year period of 2003 to 2007, we examine how health status determines a migrant worker’s earnings by labor mobility in varied industries. Our findings indicate that a good health status not only facilitates the migration decision but also expands the mobility to work in a faraway metropolitan area. On average, a healthy migrant worker traveling outside the home province can earn 26% to 49% more, compared with those who work within provincial borders from commerce to manufacturing industries. We aslo investigate the educational impact which is not as significant as the health impact on labor mobility and conclude that a less educated laborer is more likely to stay within the home province regardless of his or her health status. In order to explore the health impact solely, we employ the Mincer (1974) wage equation with the Heckman (1979) two-staged estimation to eliminate the common endogeneity problem caused by data self-selection in China. The econometric framework distinguishes the health status as the most important factor in labor mobility determination for higher earnings from all the other human capital characteristics and family economic factors. Ongoing healthcare reforms aimed at improving the local healthcare facilities and relaxing the hometown registered residence policy for rural laborers are urged strongly to resolve the poverty in rural China. A nationally transferable healthcare program will definitely enhance their mobility and earnings.