How the choice of reference group matters: economic integration of rural-to-urban migrants in China

Abstract

This paper investigates the economic integration of rural-to-urban migrants in China from a subject-centered perspective, placing migrants’ choice of reference group at the centre of the analysis. I empirically demonstrate that the choice of reference group significantly shapes migrants’ success frames and their aspirations to attain comparable economic status as urban residents (i.e. aspirations for economic integration). To study the causal effect of reference group choice on economic integration and to address the endogeneity of reference group choice, I implement instrumental variables estimation using exogenous variation in home ties. The results show that choosing urban residents as the reference group shapes both particular frames of success, which entails not only income but also possession of consumer durable goods, and aspirations for economic integration, which together, in turn, stimulate migrants to realise greater economic integration. After disentangling self-motivated work hours from total work hours by fixing the causal pathways of reference group choice, I find evidence that migrants attain a higher degree of economic integration by working longer hours. These findings suggest that migrants' success frames and aspirations for economic integration, embedded in their choice reference group, are essential for understanding what shapes their pathways to economic integration.