Hundreds of millions of rural migrants have moved into Chinese cities since the early 1990s
contributing greatly to economic growth, yet, they are often blamed for reducing urban ‘native’
workers’ employment opportunities, suppressing their wages and increasing pressure on
infrastructure and other public facilities. This paper examines the causal relationship between
rural-urban migration and urban native workers’ labour market outcomes in Chinese cities.
After controlling for the endogeneity problem our results show that rural migrants in urban
China have modest positive or zero effects on the average employment and insignificant
impact on earnings of urban workers. When examine the impact on unskilled labours we
once again find it to be positive and insignificant. We conjecture that the reason for the lack
of adverse effects is due partially to the labour market segregation between the migrants and
urban natives, and partially due to the complementarities between the two groups of workers.
Further investigation reveals that the increase in migrant inflow is related to the demand
expansion and that if the economic growth continues, elimination of labour market
segregation may not necessarily lead to an adverse impact of migration on urban native
labour market outcomes.