Are cadre offspring in the fast lane? Evidence from the labour market for college graduates in China

ABSTRACT

This paper studies the impact of having a cadre parent on the labour market performance and channels of the intergenerational transference. Using a recent data set, we find that college graduates with a cadre parent earn a wage premium of 4.46% more than those who do not. They also demonstrate advantages in obtaining a household registration (hukou), entering high-level occupations, and achieving job satisfaction. In the discussion on channels, we first show that aggressive self-investment serves as one potential channel but can only explain limited amount of the premiums. To test the other channel – interpersonal network (guanxi), we provide evidence that cadre offspring demonstrate more extensive family network resource and information advantage when searching for jobs. This channel is also supported by the finding that working closer to parents geographically or institutionally would enhance the effect of having a cadre parent.

KEYWORDS:

• Labor market performance
• cadre parent
• intergenerational transference

JEL CLASSIFICATION:

• E24
• I21
• J62

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ See Lieberthal (1995) for a more detailed description of China’s political system.

² An associate degree can be received as a precursor to a bachelor’s degree.

³ The 211 program was proposed by the Chinese government in 1990s mainly to ‘enhance 100 colleges in the twenty-first century.’ In practice, the list includes 122, rather than 100.

⁴ The 985 program was proposed by then-president Jiang Zemin to build world-class universities in China. The universities covered are therefore the best in China.

⁵ We follow the official guidelines, as stated in the Ministry of Education’s Undergraduate Specialty Catalogue of Higher Institutions (2012), which categorize all studies into 13 disciplines: (1) philosophy; (2) economics; (3) jurisprudence; (4) education; (5) literature; (6) history; (7) science; (8) engineering; (9) agronomy; (10) medicine; (11) military science; (12) management; (13) the arts.

⁶ In China, ‘minority’ indicates the 55 ethnic groups (the Man, the Hui, the Miao, etc.) with significantly smaller populations than that of the Han group. Minority ethnic groups together account for 112 million, or 8.4% of the Chinese population (statistics from The Six National Census, National Bureau of Statistics of the People’s Republic of China). Ethnic minority populations generally live in less desirable conditions, but enjoy extra benefits including lower standards for college admission.

⁷ They are all considered provincial-level units in our paper.

⁸ (1) agriculture, forestry, animal husbandry and fishery; (2) mining; (3) manufacturing; (4) power, gas and water supply; (5) construction industry; (6) transportation, storage and postal service; (7) information transmission, computer service, software industry; (8) wholesale and retail; (9) accommodation and catering; (10) finance; (11) real estate; (12) rental service, business service; (13) scientific research, technology service, geologic prospecting; (14) water and public facility management; (15) residential service; (16) education; (17) sanitation, social security and welfare; (18) culture, sport, entertainment; (19) public management, social organization.

⁹ Officials are strictly subject to the one-child policy. They will be laid off immediately if they have a second child. The one-child policy ends in 2016.

¹⁰ https://www.nytimes.com/2017/01/31/business/china-courier-delivery-labor.html .

¹¹ In our sample, the average annual income for the whole family is 80,000 RMB, from assumedly two income earners. Then, monthly income per personal is approximately 3,300 RMB.

¹² These two questions are specified and described in detail in Appendix B.

Additional information

Funding

This work was supported by the National Natural Science Foundation of China [71573008];The Fundamental Research Funds for the Central Universities [2018QZ005].