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The Joint Use of Formal and Informal Job Search Methods in China: Institutional Constraints, Working
Mechanisms, and Advantages
by
Jing Shen
A thesis submitted in conformity with the requirements for the degree of Doctor of Philosophy
Department of Sociology University of Toronto
© Copyright by Jing Shen 2013
ii
The Joint Use of Formal and Informal Job Search Methods in
China: Institutional Constraints, Working Mechanisms, and
Advantages
Jing Shen
Doctor of Philosophy
Department of Sociology University of Toronto
2013
Abstract
Using data drawn from in-depth interviews collected in three Chinese cities and the
countrywide China General Social Survey, this dissertation examined how people found jobs
during the historic period of China’s employment system change. This dissertation is written
in the format of three publishable papers. The first paper revisited China’s employment
system change, by focusing on individual reactions towards the changing employment
policies. Perceiving the persistent political authority, individuals pursued higher education,
accumulated political advantages, and mobilized network resources, to get state-assigned
jobs. Individual job-seeking strategies, in turn, boosted the state’s hiring criteria, as well as
facilitated the growth of the market principle. Consequently, state power and market strength
have been co-developed in this process.
Following my analysis of institutional constraints, in the second paper, I addressed the
question of how individual job seekers and job positions are matched together. I examined
how contact use matches individual qualifications to the employer’s hiring expectations,
iii
from an innovative perspective of the certifiability of job requirements. I demonstrated that
informal methods facilitate job-person matching success when used in combination with
formal methods, rather than being used alone.
My third dissertation paper provides strong empirical evidence of the advantages of the joint
use of formal and informal methods. I found that individuals who used formal and informal
job search methods jointly tend to obtain more job information and thus apply for more
positions. They are also more likely to exit job search successfully within a three-month time
period. Using the Endogenous Switching Regression (ESR) model, I found that the joint
channel itself is more likely to lead one to late-stage career success, as indicated by one’s
recent income.
Above all, my dissertation systematically investigated the use of contacts in the labor market
of post-socialist China, regarding its institutional constraints, working mechanisms, and
advantages.
iv
Acknowledgments
The completion of this doctoral dissertation has been a long, challenging, but also fruitful
journey. Over the years, what I have learned is not only how to produce high-quality
scholarly works, but more importantly, also a whole new understanding about life. Looking
back at the moment, I know the completion of this dissertation would not have been possible
had I not been fortunate enough to get amazing support and help from a lot of people.
I would like to express my deepest appreciation to my doctoral thesis supervisor, Professor
Bonnie Erickson. Thank you for being always encouraging, since the first day I entered this
program. Thank you for reading through hundreds of drafts of my papers and providing
thorough and constructive comments on each of them. Thank you for being amazingly
supportive not only academically, but also in other aspects of my life. Your great mentorship
not only helps me complete a dissertation I desire to achieve, but also guides me to become
the scholar I want to be. My gratitude towards you is more than just a simple “thank you.”
My heartfelt thanks go to Professor Eric Fong and Professor Alexandra Marin, who have
been extremely helpful doctoral committee members, guiding me in every step of my
dissertation progress in the past a few years. Thank you, Professor Fong, for being a great
mentor on my dissertation as well as career development. I would have taken a longer time in
this program, if it were not your close guidance and cogent advice. Thank you, Professor
Marin, for always giving me valuable and helpful feedback on my dissertation drafts so
promptly. I have also learned a lot from both of your excellent scholarship by working
together with you as a Research Assistant.
I sincerely thank Professor Robert Andersen and Professor Deborah Davis for kindly being
the internal and external examiners in my committee. Thank you both so much for taking
your precious time to read through my dissertation. Your insightful comments and advice
will surely help me further improve my dissertation for potential publications in the near
future.
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I am indebted to Professor Charles Jones, whose genuine and constant support is one of the
reasons that I felt being blessed even when going through the most difficult time. Thank you,
Professor Jones, for being such a kind TA/ RA supervisor and a good friend.
My Master’s thesis supervisor, Professor Yanjie Bian has been amazingly supportive to me
throughout all these years. Thank you, Professor Bian, for making it possible for me to access
a great dataset – the 2003 China General Social Survey. I also thank you for your strong
support for my academic career development.
I will be forever thankful to two of my greatest comrades in this program, Naoko S. Hawkins
and Sarah Knudson. Not only has their wisdom helped me navigate through my program as
smoothly as possible, but also their amazing company has made a supposedly challenging
Ph.D. experience so much more enjoyable.
I also want to say thank you to all the great people in the sociology department. Professors
Zaheer Baber, Monica Boyd, Hae Yeon Choo, Philip Goodman, John Myles, Erik
Schneiderhan, Barry Wellman, and Weiguo Zhang have been greatly supportive in various
aspects of my academic career development over the years. My current and former
classmates, Sarah Cappeliez, Phillipa Chong, Vincent Chua, Rochelle Cote, Kim DeLaat,
Omar Faruque, Loretta Ho, Lida Kaida, Scott Milligan, Guang Ying Mo, Siyue Tian, Burin
Yildiztekin, and Tony Zhang are great sources to seek academic support from, as well as
lovely company after work. Staff members, such as Carmela Versace, Jeremy Nichols, and
John Richard Manalo, were a great help, which has made my student life in the department a
lot easier.
I thank my friends outside the sociology department, Siniša Colic, Mée Hiroki, Ji Ke,
Gelareh Namdar, Ian Pang, Maira Perotto, and Bryce Sharman, for consistently reminding
me of remaining a life-work balance. It is you all who have made my life in Toronto
meaningful.
To my parents, Tailin Shen and Shanghui Ye. I feel guilty that the days I have spent with you
are countable in the past nearly seven years. I deeply appreciate that you have never said a
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single word to complain, and all what you wish for is my success and happiness. Your
unconditional love and support is the source of my strength to overcome obstacles in my life.
Finally, to my husband, Matthew Mackay. I cannot count how many times you cheered me
up when I was considering giving up, how many times you cooked for me, and how many
times you proofread my dissertation drafts. Half of my degree is yours. I love you more every
minute since the day we met.
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Table of Contents
Acknowledgments.......................................................................................................................... iv
List of Tables ...................................................................................................................................x
List of Figures ............................................................................................................................... xii
List of Appendices ....................................................................................................................... xiii
Chapter 1 Introduction .....................................................................................................................1
1.1. Two Issues in Existing Job Search Studies ..........................................................................1
1.2. Taking Individuals into Account: An Interplay Perspective ................................................3
1.3. The Context of the Transitional Economy in China ............................................................4
1.4. Data Used in This Dissertation ............................................................................................6
1.5. Structure of the Dissertation ................................................................................................8
References .................................................................................................................................11
Chapter 2 How Have Individual Behaviors Shaped China’s Employment System Change until 2003? .................................................................................................................................15
2.1. Introduction ........................................................................................................................15
2.2. Theoretical Development of China’s Socioeconomic Transition ......................................17
2.3. Historical Constraints: China’s Employment System Change by 2003 ............................19
2.4. State Policy Changes and Individual Reactions .................................................................25
2.4.1. Increasing Investment in Education: Response to the State’s Changing Emphasis ................................................................................................................27
2.4.2. Joining the Party: Response to the Increasing Competition for Assigned Jobs ........................................................................................................................32
2.4.3. Guanxi Manipulation: Response to the Persistence of State Power ......................34
2.5. Consequences of the Interplay: Concentration of the Social Elite and Their Resources ...........................................................................................................................37
2.5.1. Why Is a Quantitative Verification Legitimate? ....................................................37
viii
2.5.2. Hypotheses: Three Types of Successful Job Seekers and the Resource Distribution among Them ......................................................................................39
2.5.3. Data and Measurements .........................................................................................41
2.5.4. Descriptive Analysis ..............................................................................................45
2.5.5. Distribution of Human Capital among Three Types of Successful Job Seekers ...................................................................................................................47
2.5.6. Distribution of Political Capital among Three Types of Successful Job Seekers ...................................................................................................................49
2.5.7. Distribution of Family Ties among Three Types of Successful Job Seekers ........50
2.6. Conclusion and Discussion ................................................................................................54
References .................................................................................................................................57
Chapter 3 The Value of Mixed Methods: How Does Certifiability of Job Requirements Determine the Channels of Job-Person Matching? ...................................................................60
3.1. Introduction ........................................................................................................................60
3.2. The Effectiveness of Contact Use from the Job Seeker’s Perspective ..............................61
3.3. Linking Individual Search Behaviors to Employers’ Hiring Expectations .......................62
3.4. Typology of Job-Person Matching Patterns: Four Basic Types and Their Illustrations ........................................................................................................................64
3.5. Extensions of the Job-Person Matching Typology towards a Realistic Model .................67
3.6. Overview of the Qualitative Data ......................................................................................68
3.7. Formal Channels Only versus Informal Channels Only: A Perspective of Certifiability .......................................................................................................................72
3.8. Illustration of the Type III Scenario ...................................................................................73
3.9. Joint Use of Formal and Informal Strategies in Both Recruitment and Selection .............75
3.10. How Does the Certifiability of Qualifications Determine One’s Search Behaviors?..........................................................................................................................78
3.10.1. Data and Measurements .........................................................................................79
3.10.2. Results ....................................................................................................................80
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3.11. Conclusion and Discussion ....................................................................................83
References .................................................................................................................................86
Chapter 4 When Does Contact Use Matter? The Joint Use of Formal and Informal Channels and Job Search Success .............................................................................................89
4.1. Introduction ........................................................................................................................89
4.2. Formal versus Informal Job Search: The Mismatch between Theoretical Dichotomization and Empirical Non-Separation ...............................................................91
4.3. Hypotheses: Advantages of Formal-Informal-Joint Job Search Channels ........................92
4.4. Data, Measurements, and Methods ....................................................................................96
4.4.1. Generation of Three Job Search Channels .............................................................96
4.4.2. Dependent Variables and Other Independent Variables ........................................97
4.4.3. Methods................................................................................................................101
4.5. Advantages of the Use of the Joint Channel during Job Search ......................................106
4.6. Advantages of the Use of the Joint Channel on Recent Income ......................................110
4.6.1. OLS Estimations and Implications ......................................................................110
4.6.2. The Joint Channel versus the Formal Channel Only ...........................................114
4.6.3. The Joint Channel versus the Informal Channel Only .........................................118
4.7. Conclusion and Discussion ..............................................................................................122
References ...............................................................................................................................126
Chapter 5 Conclusion and Discussion .........................................................................................130
5.1. Overview of the Dissertation ...........................................................................................130
5.2. Contributions in the Area of Social Stratification and Inequality ....................................132
5.3. Contributions in the Area of Social Capital .....................................................................132
5.4. Directions of Future Research .........................................................................................134
References ...............................................................................................................................136
Appendices ...................................................................................................................................137
x
List of Tables
Chapter 2
Table 1. The Generation of Three Types of Successful Job Seekers 43
Table 2. Frequency Distribution of Respondents with and without Above-High-School Education by Era of Job Entry, CGSS 2003, Urban Section
46
Table 3. Frequency Distribution of Party Membership by Era of Job Entry, CGSS 2003, Urban Section
47
Table 4.Multinomial Estimates on the Likelihood of the Three Types of Successful Job Seekers, CGSS Urban Section, 2003
52
Chapter 3
Table 5. Four Ideal Types of Job-Person Matching Patterns 65
Table 6. The Expanded Typology of Job-Person Matching Channels in a Two-Stage Hiring Process
68
Table 7. Types of Job-Person Matching Patterns among Twenty-Eight Interviewees 70
Table 8. Multinomial Logistic Regression on Job Applicants’ Search Behaviors, CGSS Urban Section, 2003
83
Chapter 4
Table 9. Descriptive Statistics of Dependent and Independent Variables Used in Chapter 4, CGSS 2003, Urban Section
100
Table 10. Zero-Inflated Negative Binomial Regression of the Number of Positions One Applied for Prior to Job Entry
108
Table 11. Binary Logit Regression of Job Entry within a Three-Month Job Search Duration
110
Table 12. OLS Regression of Logged Annual Income in 2002, Urban China 113
Table 13. Endogenous Switching Regression of Logged Annual Income in 2002 between the Joint Channel and the Formal Channel Only
117
Table 14. Decomposition of Expected Logged Income between the Use of the Joint Channel and the Formal Channel Only, Predicted Based on Table 13
118
xi
Table 15. Endogenous Switching Regression of Logged Annual Income in 2002 between Joint-Channel Users and Informal-Channel-Only Users
121
Table 16. Decomposition of Expected Logged Income between the Use of the Joint Channel and the Informal Channel Only, Predicted Based on Table 15
122
xii
List of Figures
Chapter 2
Figure 1. Sector Composition of Urban Employees in China, 1978-2002 23
xiii
List of Appendices
Appendix A. Descriptive Statistics of the Qualitative Data 137
Appendix B. Distribution of the Year of Job Entry, CGSS 2003, Urban Section 138
Appendix C. Descriptive Statistics for Variables Used in the Quantitative Study
139
Appendix D. Decomposition of Group Differences in ESR Estimations 140
Appendix E. In-Depth Interview Guide 141
Appendix F. China General Social Survey (2003 Urban Questionnaire) 143
1
Chapter 1 Introduction
1.1. Two Issues in Existing Job Search Studies
Since Granovetter’s (1974) seminal study, scholarly interests in the roles that social relations
play in economic activities, such as job search, have continuously grown. The social-capital
enterprise provides an alternative job-search theory beyond the dominant human capital
explanation. A perspective of social capital also illuminates the importance of social relations
as one of the determinants of individuals’ mobility within a stratified social structure. Despite
those achievements, job search studies from the perspective of social capital have been faced
with challenges derived from two issues.
The first issue lies in the wide variation of the effects of contact use across institutional
contexts. According to Mayorova’s (2008) review, compared to the American labor market,
contact use in job search is seen less frequently in West Germany and the Netherlands (De
Graaf and Flap 1988), as well as in Sweden (Korpi 2001). The labor markets in China and
Japan show percentages of contact use as high as that in the United States. However, while
weak ties facilitate one’s job search success in the United States (Granovetter 1973, 1974;
Lin and Dumin 1986; Lin, Vaughn, and Ensel 1981), strong ties were observed to play a
positive role in leading individuals to jobs in China (Bian 1997) and Japan (Watanabe 1987).
When it comes to job search outcomes, the effects of contact use are found to vary even more
widely across (and within) societies. Using survey data in Tianjin, Bian (1997) argued that
individuals who mobilized strongly-tied contacts tended to land in more prestigious positions
than their counterparts who used weak ties, under the pre-reform job assignment system in
China. Based on a countrywide survey in Hungary, Bartus (2001) found that contacting a
high status person is as important as having two to four years of additional vocational
education, because high-status contacts inform job seekers about information that is
associated with better income opportunities. However, studies carried out in the Netherlands,
West Germany, and the former German Democratic Republic did not show significant effects
of contact use on income attainment (Habich 1984; De Graaf and Flap 1988; Volker and Flap
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1999). Based on the 1970 Detroit Area Study, Marsden and Hurlbert (1988) reached a similar
conclusion. In Singapore, Chua (2010) found a non-significant effect of contact use on job
search outcomes, due to the meritocratic social institution of the Singaporean society. The
variation of contact use and its consequences across institutional contexts has become a
challenging topic facing scholars who are interested in the use of contacts during job search.
Despite Granovetter’s (1995) insight about the institutional constraint imposed on
individuals' job search behaviors, there has not yet been a single study that specifically
addresses how individuals strategize in job search, corresponding to the institutional
constraint. Focusing on an individual perspective, this dissertation thus aims to provide new
understanding about how individuals’ job search behaviors are constrained by, and at the
same time, shape the labor market institution. By doing so, I by no means deny the important
role social institutions play in shaping individual job search behaviors; but instead, I aim to
take a close look at why social institutions matters in job search studies through a focus on
individuals’ perceptions of and reactions towards the social institution.
The second issue is the “homophily” principle – “the tendency of people in friendship pairs
to be similar” (McPherson and Smith-Lovin 1987: 370). Based on both longitudinal and
cross-sectional survey datasets, Mouw (2003) argued that the causality between contact use
and positive job search outcomes is spurious, because individuals who tend to succeed in the
labor market also tend to make friends with those possessing similar characteristics. Thus,
“much of the effect of social capital in the existing literature reflects the tendency for similar
people to become friends rather than a causal effect of friends’ characteristics on labor
market outcomes.” (Mouw 2003: 868) Despite that, Mouw (2003) admitted that “it would be
naïve to argue that contacts do not matter.” (2003: 891) Otherwise, it would be impossible to
explain the empirical fact that a significant portion of job seekers rely on social contacts in
job search in the majority of human societies (Bian 1997; Bian and Ang 1997; Boxman,
DeGraaf, and Flap 1991; Fevre 1989; Granovetter 1974; Marsden and Campbell 1990;
Watanabe 1987). The subsequent challenge is thus to reveal how contact use functions, with
the homophily principle taken into account.
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1.2. Taking Individuals into Account: An Interplay Perspective
Existing studies have not yet made satisfactory progress in terms of addressing the above two
issues. In terms of institutional constraints, by linking outcomes of contact use to
stratification consequences within a particular social structure, scholars failed to generalize a
social-capital theory across social contexts. For example, although Granovetter (1995)
admitted that institutional contexts must be considered to understand the roles of social
capital, it is not shown why and how institutional contexts should be studied. In his social-
resource theory, Lin (1999, 2001) made a more significant attempt to generalize the
application of social capital in job search. However, the theory seems to explain individual
job search behaviors better in the American context than in other societies, because weak ties
that are pervasively used in the American society function as a bridge between individuals
and desirable resources embedded in higher status positions. In Eastern Asian societies, such
as China (Bian 1997) and Japan (Watanabe 1987), the situation seems to be different,
because strong ties, rather than weak ties, play a more important role in facilitating one’s job
search success.
In terms of the homophily issue, although pro-social-capital scholars (Fernandez 2012; Lin
2001; Lin and Ao 2008) posited that the positive effects of contact use is due to the
homophily characteristic of social capital, their arguments fail to directly address the
causality concern raised by critics, such as Mouw (2003). Namely, if a highly qualified job
seeker can access both high-status social contacts and high-quality job positions, how can
researchers demonstrate that the relationship between contact use and job search success is
causal, rather than a mere association caused by the job seeker’s qualifications? The solution
currently adopted by scholars is to examine one’s social capital prior to job attainment, to
validate the causal chain between contact use and job search outcomes (Fernandez 2012; Lin
and Ao 2008). This solution is not entirely satisfactory, because using Mouw’s (2003) logic,
one’s current job search success is caused by his or her formal credentials or qualifications
prior to job attainment; thus, good contacts prior to job attainment can also be considered a
byproduct of one’s formal qualifications.
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In this dissertation, I thus argue to address the two challenges existing in the previous
literature from an individual perspective, derived from new institutionalism (Nee 1998). By
embedding individual behaviors into the massive social change, new institutionalists
emphasize the formation process, instead of consequences, of a social institution. As North
put it, institutions “evolve and are altered by human beings; hence our theory must begin
with the individual. At the same time, the constraints that institutions impose on individual
choices are pervasive. Integrating individual choices with the constraints institutions impose
on choice sets is a major step toward unifying social science research.” (North 2007[1990]:5)
By doing so, this approach successfully bridges social structure and social actors after a long-
term divergence between structuralism and individualism derived from Emile Durkheim
(1951) and Max Weber (1949) (Nee 1998). Representative research in this regard includes
Granovetter’s (1985) seminal paper on the ‘embeddedness’ problem, DiMaggio and Powell’s
(1991) study on organizational innovation, Uzzi’s (1996) finding about the network effect on
organizational performance, Sanders and Nee’s (1996) research on immigrant self-
employment, and a body of literature in economic sociology (refer to Granovetter and
Swedberg 1992; Smelser and Swedberg 1994).
The new institutionalist perspective with a focus on individuals is also of great importance to
the area of job search studies. From this perspective, contact use is not viewed as a result
simply predicted by structural and individual factors, but as a decision that individuals make
based on their perceptions of the structural constraints and their own characteristics. By
interpreting the use of social contacts and its consequences by focusing on the interaction
between structural (or institutional) constraints and individual behaviors, in this dissertation I
make a preliminary attempt to construct a universal theory about contact use in job search.
1.3. The Context of the Transitional Economy in China
Every empirical study is confined within a certain social context. For this dissertation, the
investigation of employment activities was conducted within the context of the transitional
economy of China. Since the end of the 1970s, China has undergone a transition from a “neo-
traditional authoritarian” (Walder 1988) economy controlled by state power to a market-
dominant economy. Using the term “enterprise-based society”, Hebel (1996) pointed out that
5
the state-owned enterprises were a fundamental social institution in pre-reform urban
Chinese society. This institution was well known as the “danwei” (work unit) system, which
characterized labor participation not only as a matter of employment, but also of security,
social participation, social status, and other social opportunities of individuals (Hebel 1996).
A free labor market was not legal; the so-called “labor bureaus” were put in charge of
planned allocation of workers to state-owned work organizations. As a result, this state-
controlled job assignment system integrated workers into their work units in an all
encompassing way: All labor forces were assigned to different work units by administrative
means. No work unit could hire employees or fire an assigned employee by itself.
Employees’ salaries, bonuses, and other benefits were rated and distributed by the state, and
work units were only responsible for executing the state’s commands. Meanwhile,
individuals had little freedom to choose job positions or work units by themselves. Once
entering an assigned work unit, they were required to stay for life, excluding job shifts
commanded by the state. Thus, being affiliated with a work unit meant permanent
employment and lifelong security in a material and a social sense, at the cost being in the
state’s absolute control (Hebel 1996; Zhang 2000).
Over the decades, this job assignment system, in which employment was a right for every
urban Chinese citizen in the pre-reform egalitarian society, has been gradually been replaced
by a competition-based free labor market. To get jobs, individuals need to be equipped with
as desirable qualifications as possible, and must mobilize as many job search channels as
possible. The process, from looking into hiring advertisements from newspapers, the Internet,
schools, and companies, and attending job fairs, to circulating CVs, to experiencing job
interviews, and finally to getting job offers has gradually become the dominant way for urban
Chinese citizens to get jobs. Since 2003, for individuals who enter the labor market for the
first time, the state-controlled job assignment system has become a part of history, and the
hiring procedures in the Chinese labor market do not differ significantly from those in
western labor markets.
This gradual change is usually attributed to the party-state’s power, the ultimate purpose of
which is to prevent its regime from being devastated by rapid social change (Christiansen
6
1996; Harvey 2005). This explanation may only tell one side of the story. As far as the
employment institution is concerned, at least, the state would prefer to shake off the heavy
burden of being responsible for all urban residents’ employment sooner, rather than later. It
was urban residents’ resistance to the free job market that urged the state to push the
institutional change of employment slowly. Therefore, simply considering the reform as
“state-initiated and state-led” (Cao and Nee 2000; Nee 1996; Walder 1996, 2003; Zhou 2000)
disguises the negotiation or interaction process between the state power and individual social
actors. As North (2007[1990]) pointed out, the occurrence of institutional change must
concern all participants within the existing institutional framework. That is to say, without
individuals’ active responses to the state’s changing policies, the shift of the employment
institution would not have taken place. For this reason, the case of employment activities in
transitional China provides a real-world laboratory for one to observe the constructive
process of institutional change. During this process, individual job search behaviors are, on
one hand, constrained by the changing employment policies; however, on the other hand,
they are also one of the essential components that have shaped the employment institution as
it is now. Considering individual behaviors a constructive force in the formation of social
institutions makes it possible to theorize the roles social capital plays in job search
independent from institutional contexts. Subsequently, considering individual job search
behaviors endogenous – rather than exogenous – to one’s perception of contextual constraints
and personal characteristics makes it possible to theorize the working mechanisms of social
capital with the homophily issue taken into account. Only from this theoretical approach can
a theory about the use of social capital and its consequences in job search be understood.
1.4. Data Used in This Dissertation
In this dissertation, I combined qualitative data collected in three representative Chinese
cities – Beijing, Shenzhen, and Jiangyou in 2009, and quantitative data drawn from the 2003
China General Social Survey. The use of mixed research methods has gained increasing
popularity since the start of this century. It has been called the “third methodological
movement” (Tashakkori and Teddlie 2003a: 5), the “third research paradigm” (Johnson and
Onwuegbuzie 2004:15), and “a new star in the social science sky” (Mayring 2007). While
7
quantitative research makes up for qualitative research’s weakness in terms of the enduring
bias and absence of generalization resulting from the use of qualitative research methods,
qualitative research also makes up for quantitative research’s weakness in terms of the
absence of individuals’ voices and the context (Creswell and Plano Clark 2007). The
adoption of the mixed research methods adds unique strengths to my dissertation. While the
analysis of the qualitative data generates in-depth findings, the analysis of the quantitative
data can verify if those findings can be generalized at the population level.
Regarding the area of contact use in job search, specifically, the current challenge is to
understand how exactly social institutions shape individuals’ job search behaviors, as
aforementioned. This brings the importance of the qualitative approach to the forefront. By
combining quantitative and qualitative methods together, in this dissertation I attempt to
achieve both the breadth and depth of understanding about individuals’ institution-confined
job search behaviors. By taking a qualitative approach, I will interpret how individuals
perceive the social institution, and subsequently strategize in their job searches. This will
offer a deeper understanding about the job search patterns in China’s emerging labor market
discovered by analyzing the quantitative data. On the other hand, the quantitative data
validate qualitative findings by making generalization possible at the population level. Thus,
the combination of the qualitative and quantitative analysis is an essential step to embed job
search behaviors into the institutional context and disclose the interplay of institutional
constraints and individual behaviors.
I want to emphasize that my study in the first paper (Chapter Two) has a specific time frame,
by focusing on the employment system change until 2003. Although university graduates
were pushed to look for jobs in the labor market starting in the late 1990s, it was not until
early this century that assigned jobs basically disappeared from all universities throughout
the country1. Also, despite the launch of the entrance exam for entry-level governmental jobs
in the mid 1990s, those positions have become accessible for regular job seekers only in this
1 Exceptions are government-initiated volunteer programs starting early this century. Through them, university
graduates are mobilized to support economic development in remote, rural areas. After the volunteer program is over, the volunteer may be re-assigned to a better position.
8
century. Thus, a time frame from the end of 1970s to 2003 captures the whole process in
which the previously dominant job assignment system was gradually replaced by a free labor
market. For this reason, interview cases described in this dissertation are limited to those with
the year of job entry no later than 2003, though the interview data also include cases with the
year of job entry up to 2009.
I also want to point out that the 2003 CGSS data cover exclusively urban Chinese citizens
with the registered residency (hukou) status. For this reason, rural migrants who worked in
the urban area were excluded. It is undeniable that rural migrant workers have become a
significant part of the urban labor force. The existing literature (Han, Huang, Han, 2011; Lu
and Pun, 2010; Qin and Huang, 2010) focusing on rural migrant workers’ employment in the
urban area has provided essential understanding, regarding the positive role that rural
migrants’ participation in the urban labor force plays in accelerating the marketization
process in urban China. However, in this dissertation, I will focus on the urban workforce
with hukou status only. This is because the institutional context I focused on in this study is
the employment system change. Since only urban citizens with hukou status could benefit
from the pre-reform job assignment system, it is reasonable to limit the research object to this
population, so as to show the impacts of the abolishment of the job assignment system and
emergence of the labor market on the same social group. Bringing rural migrant workers into
this study may be not only unnecessary, but also faulty, considering it would make the
focused population inconsistent before and after the abolishment of the job assignment
system. Corresponding to the quantitative data, interview cases were only focused on urban
residents with hukou status as well.
1.5. Structure of the Dissertation
Using three publishable papers, this dissertation articulates the use of different types of job
search methods, particularly social contacts, by focusing on its institutional constraints,
working mechanisms, and advantages. My first paper explains the institutional context of the
newly-emerged employment patterns. I analyzed the process of the employment system
change as the interplay between the state and individuals, revolving around three types of
resources that are essential for employment in post-socialist China, namely, education, party
9
membership, and family ties. My qualitative analysis shows that individuals, driven by their
perception of the persistent political authority, pursued higher education, accumulated
political advantages, and mobilized family ties for the purpose of obtaining declining state-
assigned job opportunities. These job-seeking strategies continuously intensified competition
for assigned jobs as the available job opportunities further declined. I emphasize that it is this
interplay of the changing employment qualifications for assigned jobs and individual
responses towards this trend, rather than either the market or the state by itself, that formed
the concentration of the social elite and their resources in the state-controlled system.
Meanwhile, individuals’ responses to the changing employment policies have equipped
individuals with market rationality and resources for market competition. My constructive
interpretation of the employment system change thus provides a sound answer to the
unsolved puzzle in the existing transition literature; namely, what has driven the co-
development of state power and market strength.
Under this institutional constraint, I shifted my focus to explaining how individuals were
matched up with job positions through different types of channels in the second paper. I
innovatively put forth an approach of examining job-person matching from the perspective of
the certifiability of job requirements. On the employer’s side, the employers’ interests in
certifiable qualifications correspond to formal hiring strategies, while their interests in
uncertifiable qualifications correspond to informal hiring strategies. Because employers often
shift their focuses between certifiable and uncertifiable qualification assessment across two
stages, as well as within each stage of a hiring process (namely, recruitment and selection),
informal channels are often jointly used with formal channels, instead of functioning alone.
On the job applicant’s side, qualifications an individual possesses also vary in the
certifiability spectrum. A successful job-person match would occur only when an
individual’s certifiable and uncertifiable qualifications match up with the targeted employer’s
hiring expectations. Because the majority of job positions require both certifiable and
uncertifiable qualifications, the joint use of formal and informal channels would lead to
successful job-person matching more often than the use of either formal or informal channels
alone.
10
In my third dissertation paper, I further elaborated on the advantages of the joint use of
formal and informal channels from the job seeker’s perspective. My analysis shows that
contact use exerts positive effects on job search in combination with formal job search
methods, instead of alone. During job search, individuals who used formal and informal job
search methods jointly tend to obtain more job information and thus apply for more
positions. They are also more likely to exit job search successfully within a three-month time
period, compared to their counterparts who used either formal or informal job search
methods only. In terms of post-search outcomes, I used individuals’ recent income as the
indicator of later-stage career success. Findings from the Endogenous Switching Regression
(ESR) model show that the use of the joint channel itself is associated with higher recent
income than that of the either type of the single channels. However, there exists a significant
self-selection effect against the use of the joint channel, probably because individuals’ cost-
benefit calculation is only focused on the job-search stage, so that individuals fail to predict
the long-term benefits of using the joint channel. Regardless of the reason, the existence of
this self-selection effect causes an under-estimation of the effect of the joint channel in
conventional methods (such as the Ordinary Least Squares model). I thus advocate that the
examination of the effects of job search methods should be separated from the effects caused
by individual job seekers.
In my concluding chapter, I restate the theoretical significance of examining the employment
system change from a constructive perspective, constructing the model of the joint use of
formal and informal job-person matching by focusing on certifiability of job requirements,
and re-evaluating the advantages of contact use in combination with formal channels by
taking into account endogeneity of social capital. I focused my discussion on how a universal
theory about the application of social capital in job search can be generalized beyond the
Chinese context.
11
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15
Chapter 2 How Have Individual Behaviors Shaped China’s Employment
System Change until 2003?
2.1. Introduction
Sociological scrutiny in social institutions and their changes is often aimed at the structural
level. From the structural perspective, studies about China’s massive social change since the
end of the 1970s are often focused on the stratified social structure indicated by political
power (Bian & Logan 1996; Parish & Michelson 1996; Rona-Tas 1994), income (Xie &
Hannum 1996), or nonmonetary benefits (Oberschall 1996; Zhou, Tuma, & Moen, 1997).
Although this approach provides a bird’s-eye view of the changing stratification mechanisms
and their impacts on social structure, scholars (Wu & Xie 2003; Zhou 2000) have
increasingly realized its insufficiency to explain the process of a large-scale social change.
Understanding the process of institutional change is of great significance, particularly in
China’s case, because a focus only on stratification outcomes cannot solve the long-lasting
debate centered on the driving force of the transition (Bian & Logan 1996; Nee 1989, 1991,
& 1996; Xie & Hannum 1996; Walder, Li, & Treiman 2000; Zhou 2000), as I will articulate
in the following sections.
Drawing inspiration from the recent development of new institutionalism— which explains
social change by focusing on the interaction between institutions and individual behaviors,
this study will be individual-centered, rather than social-structure-centered. As North put it,
institutions “evolve and are altered by human beings; hence our theory must begin with the
individual.” (North 2007[1990]:5) By revisiting one of the crucial historic periods in China,
from the end of the 1970s to 2003, in this study I will innovatively interpret a massive social
change from the individual perspective. My focus is centered on China’s employment system
change, during which a free labor market was gradually substituted for the traditional state-
controlled job assignment system.
My study is distinctive from previous transition studies, which were focused on transitional
outcomes, and thus failed to explain the formation of the co-existence of two seemingly
contradictory forces – state power and market strength. In my study, I describe China’s
16
employment system change as a process shaped by individuals’ perceptions of and reactions
towards the changing state employment policies. I do not deny the state’s leading role in the
employment system changing process, as argued in the existing literature. However,
attributing the social change path solely to state power cannot completely explain the reality.
For example, despite the fact that the state would rather relieve itself of the heavy burden of
providing permanent, full employment to all urban citizens sooner rather than later, the
employment system change did not occur overnight. As Hebel (1996) pointed out, the
previous job assignment system was not just a result of direct control, and political
intervention and/or repression; it was individuals’ acceptance that legitimized the mechanism
of status and income distribution (see Hebel 1996: 167). By the same token, the change of
this system also needs to be accepted by individuals. Thus, the interpretation from the
individual perspective is indispensable in a comprehensive understanding of the employment
system change.
For this reason, this study aims to highlight the role individuals play in a massive social
change. To do so, I portray state power (represented by the state-controlled job assignment
system) and market strength (represented by the employment mechanism in the labor market)
not as pre-determined, exogenous constraints, but as endogenous social configurations that
are ceaselessly shaped by individual behavior. While the state gradually withdrew from being
responsible for all urban citizens’ employment and pushed them into the labor market,
individuals clearly perceived the persistence of the political authority that had the ultimate
control over the distribution of social wealth. As a result, an individual’s response was to
seek the gradually decreasing assigned job opportunities and stay under the protection of the
state-controlled system as long as possible. To access the declining state-assigned job
opportunities, thus, individuals actively pursued higher education, accumulated political
capital, and mobilized family ties. These job-seeking strategies have concentrated the social
elite and their resources in the state-controlled system, and consequently solidified state
power. Meanwhile, individuals’ calculation and maneuvering in job searches has also
constructed market rationality, while individuals’ strategies for obtaining assigned jobs
equipped them with high qualifications for market competition. At the later transitional stage,
when the elite dabbled in the free market, they gained a market premium by taking advantage
17
of resources they accumulated in the state-controlled system. Their participation in the
private sector has undoubtedly hastened the growth of the market mechanism. In short, while
the previous literature emphasizes the state’s leading role in China’s socioeconomic changes,
this paper draws scholarly attention to individuals’ responses to the macro social change. I
argue that the formation of the co-existence of state power and market strength can be
understood from a micro perspective; namely, individuals’ job seeking strategies driven by
their pursuits of maximum security and of maximum benefits under the changing
employment institution nourish state power and market strength simultaneously. This study is
thus a pioneering sociological attempt to explain the process of a massive social change from
an individual perspective.
In the following sections, I will first review how China’s socioeconomic transition was
analyzed from a structural perspective in the previous stratification literature. To introduce
the historic context, I will also briefly review the employment change in China’s employment
system from the end of the 1970s to 2003. The main purpose of my study is to show how
individuals perceived and reacted to the changing employment policies, and consequently
how labor market inequality was shaped not only by the changing policies, but also by
individual coping strategies towards the institutional change. This will be based on my
qualitative analysis of twenty-eight in-depth interviews conducted in three representative
Chinese cities. I will then verify my qualitative interpretations by testing the distribution of
individuals and their resources using data from the countrywide 2003 China General Social
Survey, because my argument from the individual perspective of the employment system
change is a necessary and sufficient condition of the transitional consequence – the unequal
distribution of resources. To conclude, I will restate the necessity of examining individual
behaviors as an inseparable component of a large-scale social change.
2.2. Theoretical Development of China’s Socioeconomic Transition
Despite the variation in theoretical approaches, previous studies of China’s socioeconomic
transition mainly focused on structural changes; it is unclear about what role social actors
played during this massive changing process. For example, challenging the traditional state-
18
centered approach in the earliest literature about the socioeconomic transition of state
socialism, Nee and his collaborator (Nee 1989; Nee & Matthews 1996) put forth a new
institutionalist perspective by emphasizing the market as a crucial non-state player in
reshaping and re-stratifying the social structure. Despite its innovative attempt to examine the
market as a competing stratification force versus state power, Nee’s market transition theory
(Nee 1989, 1998; Nee & Mathews 1996) simplified “non-state actors” as the market. This
thus led to the prediction of a linear path, through which the formerly communist economy
would be converted to a purely capitalist economy. Consequently, a state-vs.-market
dichotomy was set up, which scholars followed, wittingly or not, during the long-lasting
market transition debate. Namely, Nee’s opponents criticized his theory mainly by
emphasizing the state “end” of the state-vs.-market dichotomy. One approach of this
literature, known as the technocratic-continuity hypothesis (Cao & Nee 2000), argues that
former cadres can rely on their administrative expertise acquired under state socialism to
maintain high socioeconomic status in the post-socialist era (Bian & Logan 1996; see also
Cao & Nee’s 2000 review: 1179; Rona-Tas 1994). Another approach, the power-conversion
hypothesis (Cao & Nee 2000), argues that political power and capital possessed by cadres
can be translated into various forms of economic advantages when a market economy is
created (Parish & Michelson 1996; Walder 2004; Zhou 2000; Zhou et al. 1997).
With an assumption of an opposing relationship between state power and the market, Nee
and his opponents have each grasped one facet of the complex social change. Based on both,
Zhou (2000) put forth a “coevolution between politics and markets” model. As Zhou stated,
“state-initiated reforms and emerging markets have been two major sources of economic
transformation. Both interest politics and markets coevolve in interactions with each other…
[N]either one can be understood without a careful and substantive understanding of the
other.” (Zhou 2000:1140) Despite being theoretically enlightening, Zhou’s (2000) study did
not offer an explanation about what drives the co-evolution of “politics and markets.”
Following Zhou, Wu and Xie (2003) proposed treating workers as “dynamic social actors
who are not simply affected by the market, but rather respond to it by actively situating
themselves in the labor market. (Wu & Xie 2003: 429)” By categorizing individuals into four
19
groups based on their work history in the public and market sectors, Wu and Xie (2003)
found that the public and market sectors do not differ from each other in terms of economic
returns to human capital. Although Wu and Xie (2003) did not directly explain the co-
evolution process of the state and market, the emphasis on individuals’ active reactions in the
labor market is undoubtedly an inspiration.
Previous scholarly contributions clearly show the necessity of incorporating individuals to
understand the process of social change in which strong state power and a booming market
co-exist. To demonstrate this point, I will use China’s employment system change from the
end of 1970s to 2003 as a case study. As employment scholars argued, “the employment
activities an individual displays are based on the complex interplay of employment motives
and goals; personal, emotional, and social tendencies; and unique personal and situational
conditions.” (Kanfer, Wanberg, & Kantrowitz 2001:838) Thus, the change in the
employment system provides a perfect scenario for one to observe the interplay between
macro institutional constraints and micro individual reactions. To understand the process,
some background knowledge about the historic change in China’s employment system is
necessary.
2.3. Historical Constraints: China’s Employment System Change by 2003
The pre-reform employment system in China was well known as a state-controlled job
assignment system, in which the so-called “labor bureaus” were responsible for planned
allocation of urban citizens to state-owned work organizations. Using the term “enterprise-
based society”, Hebel (1996) pointed out that state-owned enterprises (SOEs hereafter) were
a fundamental social institution in the pre-reform urban Chinese society. This institution was
well known as the danwei (work unit) system, which characterized labor participation not
only as a matter of employment, but also of security, social participation, social status, and
other social opportunities of individuals (Hebel 1996). A free labor market was not legal; the
so-called “labor bureaus” were put in charge of planned allocation of workers to state-owned
work organizations. This job assignment system integrated workers into their work units in
an all-encompassing way: On one hand, all labor forces were assigned to different work units
20
by administrative means. No work unit could hire employees or fire an assigned employee by
itself. Employees’ salaries, bonuses, and other benefits were rated and distributed by the
state, and work units were only responsible for executing the state’s commands. On the other
hand, individuals had little freedom to choose job positions or work units by themselves.
Upon entering an assigned work unit, they must stay for life, excluding job shifts abiding by
the state’s commands. Thus, being affiliated with a work unit meant permanent employment
and lifelong security in a material and a social sense, at the cost of absolute state control of
one’s socioeconomic behaviors (Hebel 1996; Zhang 2000).
By using the state’s plan to allocate workers into work units, this totalitarian job assignment
system, in principle, made it possible to save on recruitment costs and achieve advances more
efficiently. The reality, however, did not unfold as the planners expected. Because of its
comprehensive coverage on not only employment, but also social security, social status, and
all resources for one’s basic needs, this labor system created entitlement to employment for
both state employees and their offspring2 who came of age. Consequently, the gate-keeper
function of the labor bureau could not be sustained because of the rapid growth of the urban
population3 by the end of 1970s. Labor bureaus were forced to deal with increasing
overstaffing. Conservative estimates indicate that between 15 and 30 million workers in
urban state-owned enterprises were superfluous in the mid 1980s (Christiansen 1996).
Furthermore, the employment pressure intensified when the policy of sending urban youths
to the countryside was stopped. Those youths still in the countryside were gradually allowed
back to cities4 near the end of 1970s and early 1980s (Christiansen 1996).
The state was therefore forced to adapt its “full-employment” job assignment system to the
unprecedentedly severe employment pressure. Changes have since occurred, both inside and
2 Claimed as the greatest advantage of the socialist system relative to the capitalist system, a state-owned work
organization was responsible for all needs of its employees, including employment of their offspring. 3 In the early 1980s, the urban population had reached 206.5 million (Demographic Yearbook of China 2001).
4 During the Cultural Revolution, urban youth were sent to the countryside, in order to relieve the employment pressure in urban areas. This policy was abolished in 1979, and those sent to the countryside were allowed to go back to their home cities. Consequently, employment became an extremely severe socioeconomic issue in urban areas. According to Zhang (2000), there were 17 million urban residents who needed jobs in the end of 1970s and early 1980s.
21
outside the state-controlled workplaces. Inside the state-owned work organizations, firstly, a
labor contract system5 was officially enacted throughout the country in 19866. For the first
time, labor contracts could be given to workers upon their first entry into state-run work units
(Hebel 1996). Despite its legal validity on paper, in reality this labor contract system was
hardly practiced in the 1980s. Under the dominant socialist ideology, managers were not able
to lay off workers, even when bad conduct and performance were obvious. “[T]o avoid
conflicts, managers gave the same treatment to contract workers and the working conditions
of contract workers approached those of permanent workers.” (Hebel 1996: 168) Despite
this, a real change was seen in the job assignment system itself. Instead of an individual’s
absolute obedience to the state’s assignment, job allocation in this era was based on “mutual
selection”7 between the work unit and the individual.
Since 1992, new efforts were made to implement labor reform. For one, a policy entitled ‘All
Staff Labor Contract System’ was put on the agenda8. “The goal of this system was that all
staff members and workers should sign a contract with an enterprise of their choice. This new
contract system was thought of as an instrument for managers to employ the right staff and
workers in order to meet market conditions better. It was also said that workers should gain a
greater choice in their jobs and enterprises.” (Hebel 1996: 168) In the same year, the central
government also issued ‘Regulations on Changing State-owned Industrial Enterprises’
Management Systems,’9 which stated that the state-controlled job assignment system should
be replaced by a competition-based hiring mechanism in SOEs. As of the end of 1992, 25.4
million staff and workers, namely, 17.2% of employees in state-owned workplaces reported
5 Tentative Regulations about the Implementation of a Labor Contract System in State-owned Enterprises,
enacted on October 1st, 1986. The full text is available at: http://wenku.baidu.com/view/bd030ef79e31433239689376.html 6 Some experiments had been carried out earlier.
7 See “A Brief Review on the Employment of University Graduates in China.” The full text is available at:
http://12945294.blog.hexun.com/38691637_d.html 8 An Announcement about Proposed Solutions on Issues Related to the Tentative Implementation of All Staff
Labor Contract System from the Ministry of Labor, enacted on September 12th, 1992. The full text is available at: http://www.law-lib.com/law/law_view.asp?id=55194 9Quanmin Suoyouzhi Gongye Qiye Zhuanhuan Jingying Jizhi Tiaoli, available at http://www.whhd.gov.cn/news/oldnews/103855435885586200.html.
22
that they had signed a labor contract (Hebel 1996; data source: China Statistical Yearbook
1993). Starting from the mid 1990s, the reform in SOEs had reached a new stage. While
superfluous workers were starting to be laid off, youths who came of age gradually stopped
being assigned into job positions. From 1997 onwards, graduates from general10 universities
were, in principle, not covered by the state-controlled job assignment system any more. By
2003, the job assignment system was basically abolished in all remaining universities.
Meanwhile, the National Entrance Exam for Governmental Officials was substituted for job
assignment as the primary hiring channel for entry-level positions in all governmental
organizations. Ever since, the job market has replaced the state-controlled job assignment
system, and has become the primary channel for one to get a job in China.
Outside the state-controlled system, the elements of a free market were never eradicated,
even during Mao’s era. Collective enterprises11 had always played an important role in
providing some outlets for the urban unemployed. “These enterprises were operating outside
the state plan, and formed a structural precursor for labor service enterprises, and also
established the background for other non-plan economic activities.” (Christiansen 1996: 181)
Typical examples were the widespread “labor service companies12” founded by large-scaled
SOEs. Meanwhile, the state also (re)legitimized jobs in the private sector in the early 1980s.
Figure 1 shows changes in the sector composition of the urban employees from 1978 to 2002.
During the first decade of the reform, most employees that were not under the coverage of
the state-controlled job assignment system were hired in collective enterprises: the
10 Universities subordinate to the Ministry of Education are general, and abide by all polices issued by the ministry. Those policies do not necessarily affect universities subordinate to other ministries, such as the Ministry of Defence and Ministry of Justice. 11 The major function of collective enterprises was initially to relieve social burdens of a local society, for example by providing employment opportunities to SOE employees’ spouses and offspring, and local residents who were once sent to the countryside. A hiring decision in a collective enterprise was made at the local level rather than through the state’s plan. Therefore, positions in collective enterprises were not covered by the state job assignment system. 12 The labor service companies (LSCs hereafter) were collective enterprises with no fixed wages and only profit sharing. “In this way, part of the staff would be placed outside the state plan, and the costs could be kept lower… Other LSCs were set up with large investment in highly competitive sectors, including transport, catering, the tourist industry, and even manufacturing. Operating outside the state plan and with less commitment to social overheads, LSCs were effective and contributed to the development of a ‘market’ outside the state plan.” (Christiansen 1996 183)
23
percentage of employees working in collective enterprises stayed around 28%. The
proportion of people employed in the private sector reached only 3.8% of the total employed
population in 1985, and displayed a setback in the end of 1980s and early 1990s. It is only
after Deng’s famous talk during his South China tour in 199213 that the number of employees
in the private sector started to soar. The percentage of employees in the state sector has
decreased sharply since the 1990s. I need to reemphasize that among those employed in the
state sector, contract jobs had started to replace assigned jobs that endowed SOE workers
with permanent employment, though the exact numbers were not recorded. As shown in
Figure 1, by 2002 half of the employed population was hired in the private sector. While the
percentage of workers in the state sector was down to less than 50%, a much smaller portion
of them had state assigned jobs.
Figure 1. Sector Composition of Urban Employees in China, 1978-2002
Sources: Statistical Yearbook of China 1992 and 2003; Zhang, Minglong. 2000. “A Historic Review of Five-decade Changes of the Employment System of China,” Tianfu Xinlun, Vol. 1, 11-16.
In short, from the end of the 1970s to 2003, China’s employment institution had changed
from a state monopoly over all job opportunities, to a reformed state-controlled system in
which market elements (i.e., contracts) started to grow, and finally to an increasingly mature
13 Deng Xiaoping, who initiated the socioeconomic reform in China in 1979, stated that China should build up its socialist market economy during his tour to South China in 1992. This symbolizes that the socioeconomic transition of China has entered a second stage.
0
10
20
30
40
50
60
70
80
90
1978 1985 1991 2002
Party, governmental, and
public insitutions, and
SOEs
Collective
Hybrid and private
24
labor market that dominates not only the private sector, but also the state sector. Currently,
job assignment may only occur after one enters a state-owned organization, or in certain
politically-oriented recruitments14.
This gradual change is usually attributed to the party-state’s power, which aimed to maintain
the socialist system to the greatest extent (Christiansen 1996; Harvey 2005). This explanation
may only concern one side of the story. As far as the employment institution is concerned, at
least, the state would prefer to relieve itself of the heavy burden of being responsible for all
urban residents’ employment sooner, rather than later. It was urban residents’ resistance
towards the free job market that forced the state to push the change slowly. Therefore, simply
considering the reform as “state-initiated and state-led” (Cao and Nee 2000; Nee 1996;
Walder 1996, 2003; Zhou 2000) disguises the negotiation or interaction process between
state power and individual actors. As Hebel pointed out, the stability of the danwei system in
China “was not only a result of direct control, political intervention and/or repression, but it
was built into the accepted and legitimizing mechanism of status and income distribution.”
(Hebel 1996: 167) Namely, it is not the unilateral state’s control, but the mutual agreement
between the state and urban residents that founded the stability of the danwei system. That is,
the gradual institutional change in China’s employment system has to be explained by taking
into account individuals’ perceptions of and responses to this state-led reform. By focusing
on how individuals understood and responded to the changing employment institution in the
following qualitative section, I will explain why China’s employment system change
followed the path it took in the last three decades.
14 “University Volunteers Serving the West,” initiated by the central government, has operated since 2003. Under this project, every year a certain amount of university graduates are recruited to work in poor counties or rural areas of the western region. Another similar project was launched in 2006. After their tenure is due, a volunteer graduate would be assigned to a better position in the government. See “A Brief Review of the Employment System Reform about University Graduates in China” (Woguo Daxue Biyesheng Jiuye Zhidu Gaige Jianyao Huigu), available at http://12945294.blog.hexun.com/38691637 d.html.
25
2.4. State Policy Changes and Individual Reactions
In this section of my qualitative analysis, I will elaborate on the changing employment
system by focusing on individuals’ responses towards the changing state policies. I collected
qualitative data in three Chinese cities, Beijing, Shenzhen, and Jiangyou, in the summer of
2009. The three selected urban locations are representative examples of North China, where
the central government has the strongest influence, South China, where the market economy
started earliest and developed fastest, and West China, where the central government’s
control and market strength are both relatively weak, respectively. By adopting the snowball
sampling method, I composed a sample frame with up to 50 individuals in each city.
However, to match up with the quantitative analysis in this study, I only selected interview
cases in which the informants were urban residents with the local hukou status and got into
their current workplaces no later than 2003. I also excluded self-employed cases from this
study. As a result, twenty-eight cases were used in this study, including ten cases in Beijing,
and nine cases in Shenzhen and Jiangyou, respectively. Descriptions of interviewees’
characteristics are provided in Appendix A.
In order to conduct the study in Chapter 3, I oversampled individuals who entered their
current workplaces around the year of 200315. This is because the influence of the state-
controlled job assignment system under the socialist regime did not completely fade away
until early this century. Although studies (Bian 1997, 2001, 2002) have shown that guanxi
(social relations) might have been mobilized for a better assigned job, it was not uncommon
for one to get a job without active search under the job assignment system. Particularly, the
older the respondent is, the more likely it is for his or her case to fall into the “no search”
category. However, this would not be a concern for individuals who entered the labor market
from 2000 onwards, by which time even job positions in the public sector became
competition-based, instead of need-based. Oversampling the younger generation gives rise to
significantly greater proportions of respondents with university degrees and of respondents
15
Cases in which informants entered their current workplaces after 2003 were excluded in the analysis, to match up with the analysis of the 2003 CGSS data.
26
who entered their current jobs after 1992, which serves the purpose of the study in Chapter 3,
by increasing the variation of job-person matching patterns. As a result, my twenty-eight
informants consisted of 58% males and 42% females. 43% of informants were below thirty
years old, 30% of them were between thirty and forty years old, and 27% of them were above
forty years old. 64% of the informants had some higher education; in fact, 48% of them had
graduate degrees. 48.5% of the informants were party members. While 73% of the
informants entered their current workplaces after 1992, 15% and 12% of them entered their
current workplaces before 1979 and between 1979 and 1991, respectively. I do not intend to
generalize my qualitative findings solely based on the twenty-eight in-depth interviews.
Instead, the purpose of the qualitative part of my study is to delineate a macro social change
from the individual perspective, by focusing on how individuals understand and respond to
the state’s changing employment policies. Hypotheses derived from my qualitative findings
will be tested using the representative countrywide survey data.
According to my interview data, the majority of the interviewees emphasized the political
context, when talking about their job attainment stories. Certain phrases frequently appeared,
including “under the background of the CCP (Chinese Communist Party),” “in the political
context of China,” “China’s unique politics,” “the leadership of the Communist Party,” and
so on. The emergence of the labor market was not perceived as a sign of the declination of
the state’s totalitarian authority. “No matter how this society changes, the governance of the
CCP wouldn’t change, at least as far as I can see,” Mr. Jian Fang16, a 56-year-old
departmental chief in a large-scale SOE made the above comment. This perception directly
led to individuals’ persistent preference towards assigned jobs. In the following analysis, I
will demonstrate this point by analyzing individuals’ coping strategies towards the changing
employment environment in three dimensions, human capital, political capital, and social
capital. Arguably, these three types of resources are the most valuable— if not exclusive—
resources under the state socialist employment institution. Focusing on these three types of
pre-hiring resources, I will show that it is qualifications for entering the state-controlled job
16 All interviewee names appearing in this study are pseudonyms, for the reason of confidentiality.
27
assignment system, rather than the labor market, that orientate individuals’ job seeking
behaviors, at least for those who seek jobs for the first time. Meanwhile, individuals’
persistent pursuit of assigned jobs also impacted macro policy changes, by raising the entry
bar for state-controlled jobs, as well as speeding up the development of the market economy.
2.4.1. Increasing Investment in Education: Response to the State’s Changing Emphasis
Recent studies have shown that economic returns to human capital do not differ between the
state and market sectors (Wu & Xie 2003; Xie & Hannum 1996). Unlike the prediction of the
market-transition theory (Nee 1989), the market economy is not necessarily more
meritocratic than the job-assignment system. In fact, since the late 1970s it has become
vitally important for the party-state to recruit talented people from all social classes for its
“pursuit of a technocratic economic growth policy” (Gabriel, Powell, & Mundt 1996).
Individuals now preferred by the party-state are those having “the skills desired by party
leaders to accomplish their new policy agenda (Bruce 2000)”. As Townsend and Womack
commented, “in general, post-Mao recruitment has reverted to the pattern of the mid-1950,
except that recruitment now is less class-oriented and even more committed to including
intellectuals.” (1986: 299)
The revival of the university entrance exam system in 1978 was a clear sign of the state’s
inclination towards higher education. Perceiving the state’s (re)emphasis on education,
individuals started to invest in education in order to find a “good” assigned job. The
aforementioned informant, Jian, is a typical case in this regard. Jian was initially recruited
into a large-scale SOE, the Great Wall Steel Manufacture, as a manual worker in 1972. Being
good at calligraphy, however, Jian was quickly promoted to be an associate office head in a
sub-branch of the enterprise. Despite a promising career prospect, Jian decided to take a
continuing-education program in 1984. As he explained:
“When I first got my job, a junior high graduate appeared to be a knowledgeable
person already. At that time (in the early 1980s), I felt like the situation changed. The
state needs intellectuals now. I must be left behind if I still had only a junior high
28
diploma. I felt that I needed recharge, learning more stuff, so as not to be kicked out
by the society.”
Clearly, Jian’s motivation for pursing higher education was based on the fact that “the state
needs intellectuals now.” Responding to the state’s new policy and obtaining higher
education thus directly led individuals to better jobs. Although Jian suspended his work to
study in a college program for two years, he was promoted to office head in the central
department of Great Wall Steel immediately after he received the degree. When the supply of
university graduates fell short of the state’s demand for intellectual employees, individuals’
investment in higher education paid off in the state sector in the 1980s. In another case, a 45-
year-old high school principal, Mr. Gu Huo recalled that when he graduated from a
prestigious university in the local region in 1987, each graduate could bargain with the labor
bureau for an ideal assigned job. Gu himself refused the first assigned job because of his
dissatisfaction with the geographical location, before getting a second assignment that finally
met his expectations.
Simply put, in correspondence with the state’s changing policies, with an emphasis on
education, individuals started to invest in higher education to get ahead in the state-controlled
job assignment system. That is, individuals’ pursuit of education cannot be attributed to the
meritocratic principle of the market at this stage. As the existing literature (Davis 1999; Wu
& Xie 2003) shows, most private entrepreneurs and individual business owners (getihu) in
the first decade of the reform were migrant peasants, unemployed youth, dismissed workers,
former criminals released from prisons, and retirees. The influx of the urban unemployed and
migrant peasant workers made the private sector unattractive to the mainstream, by bringing
in a stigmatized label of “lower class.” University graduates, among other social elite, who
could easily access high-status jobs through the state’s job assignment, would not feel
motivated to dabble in the private sector, at least in the first stage of the employment system
change.
While state policy stimulated individuals’ pursuit of higher education, this individual reaction
also retroacted to the state’s hiring criteria. As the supply of university graduates rapidly
caught up with and exceeded the state’s demand, university graduates’ advantages in
29
obtaining good assigned jobs faded away. The case of Mr. Lei Yang confirms that a
university degree started to lose its privilege to access desirable assigned jobs in the 1990s.
When graduating from the Wuhan Water Conservancy College in 1992, Lei was assigned to
a state-owned oceangoing company in his home province, although his grades were good
enough to enable him to choose his ideal work unit— Shanghai Maritime Bureau. Lei
appealed for a re-assignment, but unfortunately got rejected. Lei recalled:
“The employment pressure (for university graduates) had emerged. Huge competition
for (getting into) good danwei (work units). My department forced me to go back (to
my home province); I had no choice. If I had insisted, I might have ended up getting
nothing.”
While the number of university graduates has multiplied, the job assignment system
continuously declined. Faced with this irreversible trend, individuals did not choose to
embrace jobs in the market sector immediately, but instead, strategically pursued higher
educational degrees. Lei’s remarks explicate the rationale behind this behavior:
“If I had not accepted the assignment, I must go looking for jobs on my own. I was
just a poor young student, having zero work experience, (and) knowing nobody…
There is a saying that ’a camel that died of hunger is still bigger than a horse.’ After
all, you got assigned into a SOE, which made your choices open. (If) [y]ou like it, you
stay; (if you) don’t like it, well, you could always choose to leave later on. The
reverse way would be very hard: Don’t dream about getting into a SOE if you didn’t
choose it in the beginning.”
On one hand, an individual entering the labor market for the first time lacked resources to
succeed in market competition. On the other hand, the state assignment channel provided
more flexibility than the labor market for one’s future career development. Perceiving these
two points, people’s preference towards the state job assignment system did not disappear
with the withdrawal of the system, but rather, became stronger. From the 1990s onwards, to
access the shrinking number of job assignment opportunities, individuals chose either to
advance their education further, or to focus on particular majors and universities for which
30
state-assigned jobs would still be accessible. My interview data show that starting from the
mid 1990s’, a Bachelor’s degree could no longer secure an assigned job. Individuals chose
either to pursue a Master’s or even a Ph.D. degree, or to select universities strategically.
“During the later stage of my undergraduate, I sensed I needed a Master’s degree. You see, I
finished my undergraduate in 2000, by which year most graduates had to be on the market.
You must know how competitive the job market has been…” said Mr. Gang Hu, a 32-year-
old Master’s graduate who entered the central government in 2003. In another case, a 29-
year-old customs officer who got his current job through the governmental official entrance
exam in 2002, Mr. Jun Ye, purposely chose to attend a university that is directly subject to
the Ministry of Justice of China. Due to this university’s association with the ministry,
various governmental departments throughout the country come to this university to hire new
graduates directly. As Jun commented on his job search experience, “it doesn’t seem to be so
hard for graduates from our university to get jobs.”
In short, to release itself from the heavy burden of a full, permanent employment system, the
state initiated the first move by prioritizing university graduates’ employment opportunities,
though less-educated urban citizens could still have access to assigned jobs in the 1980s. As
individuals actively responded to this shift in the state’s hiring preference, the supply of
university graduates rapidly exceeded the state’s demand. While higher education was only
an asset for one to get ahead in the job assignment system in the 1980s, it became a required
qualification for one to even access an assigned job in the 1990s. Clearly, although it was the
state that made the first move in restoring the importance of human capital in the hiring
process, the continuously increasing educational entry bar was due to the “push” factor—
individual job seekers’ increasing investment in education. In other words, individuals’
reactions (pursuit of higher education) to the initial policy change (reemphasis on education)
accelerated the meritocratic trend of the job assignment system, and consequently reinforced
the state’s preference for hiring intellectuals. Thus, I must restate that an education-driven
employment system occurring in China’s post-transition labor market is not due to the
emergence of the market mechanism. Instead, the continuous increase in required educational
qualifications is constructed in the process, in which individual job seekers consistently
31
invested in education to gain advantages in securing assigned jobs while the state
consistently cut down the number of available assigned jobs.
One may disagree on the above argument by pointing out the fact that an increasing number
of the highly-educated have dabbled in the market, as the employment system change
continued. For example, in the wave of “xiahai” (jumping into the sea) in the 1990s,
numerous intellectuals and former communist cadres shifted their jobs from the public sector
to market sector. However, as Hebel (1996) found, individuals would seek opportunities
more actively in the private sector after they held assigned positions as their primary jobs. As
he said, during the 1990s it was a common trend to take a second job in the market, while
holding one’s assigned job in the state sector. Particularly, highly-educated employees, such
as professors, teachers, technicians, and researchers were the leading cohorts among two-job
holders. Even for those who completely shifted from the public to market sector, resignation
rarely took place. A typical way to “jump into the sea” was to get a permit from the original
workplace for “leave without pay.” Namely, although one does not work for, nor get paid by
the original state-owned workplace, one could pay the workplace a certain amount of annual
fees to keep one’s affiliation to this workplace for years. In this way, one could come back to
the original workplace if the attempt of “jumping into the sea” failed. A second piece of
counterevidence one may have is that highly-educated job seekers indeed started to look for
their primary jobs in the labor market after the mid 1990s, as shown in Wu and Xie’s 2003
study. However, my in-depth interview data reveal that highly-educated individuals chose to
seek employment primarily through the labor market only when their ideal assigned jobs
were not accessible. With similar economic returns and career development opportunities
provided, one would still prefer an assigned job over a job available in the free market,
particularly when entering the labor market for the first time.
As Lei commented above, “a camel that died of hunger is still bigger than a horse.” An
assigned job functions as a safety net. Even with a relatively low economic return, being
assigned into the state sector means lifetime security and benefits, which makes assigned jobs
ultimately superior to jobs in the market. An assigned job also functions as a spring board, by
allowing one to access and take advantage of rich resources in the state sector for further
32
career development, most often in the market sector. Particularly, highly-educated
individuals’ participation in the free market is not contradictory to my argument that
attributes the overall increase in education in the post-socialist era to individuals’ preference
towards state-controlled jobs. In fact, it is the highly-educated who were more likely to gain
market premium by taking advantage of resources they accumulated within the system at the
later transitional stage (Wu & Xie 2003).
2.4.2. Joining the Party: Response to the Increasing Competition for Assigned Jobs
As shown above, a direct impact of individuals’ vast investment in education is the rising
educational entry bar of assigned jobs. When increasing educational qualifications could not
preclude as many job seekers as the state expected, the importance of political qualifications
was emphasized in the job assignment system. As Walder et al. (2000) pointed out, political
credential still plays a crucial role, particularly when it comes to positions that exercise
decision-making authority. The state’s continuous emphasis on political qualifications
directly led to individuals’ participation in the CCP. In his study on the Party’s recruitment of
college students in the last several decades, Guo (2005) showed that the changing trend in the
number of student party members corresponds to that of the employment situation. The ratio
of social demand to the supply of college graduates was 3 to 1 in 1986, which evidenced
ample employment opportunities for highly-educated individuals in the 1980s.
Correspondingly, the proportion of college students who joined the Party declined
dramatically from 11% (in 1979) to less than 1% in 1989 (Guo 2005:375). However, when it
turned to the 1990s, the number of college students has consistently increased during the
whole decade, and increased even faster since 1999, when the state decided to significantly
expand college enrolment. According to Guo (2005), undergraduate party members increased
from 16,000 to 209,000, or from 0.81% to 3.83% of the total undergraduate population from
1990 to 2000. It is thus reasonable to say that one’s participation in the CCP was, to a
significant degree, driven by the increasingly intensified competition for assigned jobs. As
Guo (2005) pointed out, nowadays the majority of students strive to join the Party out of a
personal pragmatic concern for their job searches and career advancement, rather than for an
33
ideological reason. When asked about his motivation for joining the Party, a 26-year-old
salesman who entered his company, Lenovo Ltd. in 2002, Mr. Wei Cao said:
“You’d definitely want to have as many advantages as possible to be ready for the job
market, especially when you didn’t know what kind of job you’d end up in. After all,
SOEs still prefer party members, if candidates’ academic performances are the same.
On the other hand, being a party member wouldn’t be a disadvantage in private
firms, if it’s not an advantage. So, I can’t see why not (to get party membership).”
Wei’s remarks clearly represent individuals’ rational calculation in terms of joining the Party.
Party membership is seen as a safe investment that, under the CCP regime, has no negative
consequences, but only potential benefits. Ms. Yun Zhen, a 30-year-old associate
departmental chief in a state-owned bank explained why being a party member would benefit
one’s job search. “Indeed, some excellent graduates don’t want to join the Party; but if you
are not good enough, you definitely cannot get in (the Party). So, being a party member more
or less proves your merits.”17 This supports Guo’s (2005) argument that party membership
connotes desirable qualities in a job seeker, such as organizational and communication skills,
team spirit, and the capability to get things done.
Take Gang’s case as an example. Gang got into the top management school of the country
with outstanding grades on the entrance exam. When Gang realized that he could not be as
successful as before in academic competition, for his rivals were all top students from
different places throughout the country, he decided to “work the other way around”. Gang
applied for the CCP’s membership actively, and became a party member at the early stage of
his undergraduate period. Beyond this, Gang also actively participated in party events, and
was eventually appointed to be the highest-rank student leader in the party branch of the
university. As Gang said, political performances are “like a bumper… I need to bump up my
qualifications, ‘cause you know, if (the committee) only looked at academic performances, I
17 Party members are claimed as pioneers whose mission is to lead the masses in achieving collective and individual well-being under the socialist regime. Therefore, in principle, only the “best” individuals in every field can be recruited into the communist party. However, the definition of “best” changes over time.
34
couldn’t be ranked high enough.” Because of his outstanding political performance in the
party branch of the university, Gang was successfully recommended to enter the Master’s
program. Three years later, Gang successfully entered the central government. Although he
entered his job by taking the entrance exam, Gang pointed out that his political performance
weighed significantly in his successful job search.
In short, human capital had outweighed political capital in the job assignment system in the
first decade after a free labor market was legitimized. As the market mechanism further
matured, political capital seemed to regain its popularity, particularly among university
graduates. This phenomenon, again, cannot be attributed to the growth of the market.
Moreover, focusing only on the persistence of state power, one cannot explain the “down and
up” trend of the importance of political capital, either. By contrast, considering joining the
party as the complement to one’s educational credentials, I explained that the increasing
trend of joining the party is driven by the increasing competition for state assigned jobs.
Under the condition in which a university degree could no longer secure an assigned job,
individuals perceived party membership as a supplemental advantage that may increase one’s
chance for getting an assigned job. On the surface, the increasing number of student party
members shows that the state’s control over employment has not been weakened, but
solidified. At the deeper level, however, this pragmatic behavior with an instrumental
purpose of job search matched the market rationality very well. It seems reasonable to say
that individuals’ strategies for getting assigned have also paved the way for the advent of a
market-economy era.
2.4.3. Guanxi Manipulation: Response to the Persistence of State Power
Social capital is a third component that constructs the changing employment system.
Although the importance of social capital in labor markets has been well demonstrated
(Granovetter 1973, 1995; see also Lin’s 1999 review), scholars found that the role social
capital plays varies with the institutional context (Granovetter 1995). The term ‘guanxi’
(relations in Chinese term) in China is used to describe a kind of patron-client relationship,
which is considered to be an inseparable part of the Chinese economy (Bian, Breiger,
35
Galaskiewicz, and Davis 2005; Bian, Davis, and Wang 2006; Christiansen 1996; Oi 1989).
This is not only because guanxi is culturally embedded in every aspect of the Chinese’s lives
(Fei [1949]1992; Gold 1985), but also due to its’ pragmatic function in distributing resources
within a certain boundary (Yang 1994). In his study about the use of ‘guanxi’ for getting a
job in pre-reform China, Bian distinguished two major functions of social capital in the
process of job attainment: influence imposition and information flow. As he pointed out,
under the job assignment system in pre-reform China, the mobilization of guanxi benefits job
seekers by imposing influence on the employer side and bonding the job seeker and the
employer, so that a job assignment would be made through guanxi (Bian 1997).
Although guanxi was never the state’s official hiring criterion, its usage was pervasive during
the command economy era. Under the rigid state-controlled system, as Oberschall (1996)
argued, individuals, as well as families, cliques, subunits, and work units, cultivated and
modified informal networks that penetrated vertical boundaries and compartments, “to
escape the rigidities and controls of the party-state and danwei, and to get ahead of others.”
(Oberschall 1996: 1031) This collective behavior was thus institutionalized, by “creating and
forever changing a parallel, informal system of social organization that constituted a kind of
no man’s land in which conformity and deviance were blurred and could be manipulated to
advantage.” (Oberschall 1996: 1031) The case of Mrs. Yi Li, a 52-year-old division chief in
the Urban Planning Department, supports this argument. As Yi said, the reason that she could
get a job in the government in 1976, instead of being sent to the countryside, was because of
her father who was the head of the Military Department in the local city18. “My father knew
someone in the labor bureau. It’s not difficult for him to get me an assigned job,” said Yi. Yi
thought that “it’s no big deal” to get a job using her father’s influence, because “everybody
did that.”
Therefore, the interaction of the rigid job assignment system and individuals’ attempts to get
around the system caused the pervasiveness of guanxi manipulation in the pre-reform era.
Although unofficial, guanxi manipulation was “institutionalized” and created an “informal
18 The name of city is not identified here, for the reason of confidentiality.
36
rule” that no one could escape under the communist regime. Presumably, this informal
employment institution should have changed in the process of the substitution of the labor
market for the job assignment system. In reality, however, individuals’ competition for the
declining state-controlled job opportunities has reinforced, rather than reduced, the use of
guanxi.
Mr. Liang Wang, a 30-year-old governmental official who got his job in the Economic
Development Council of his home city in 2001, described his “job search” experience as
follows:
“I had wanted to go outside (of my hometown). However, I couldn’t find a job
outside. My college is a local college, which doesn’t have a countrywide reputation.
Then, I tried to take a Master’s program somewhere else, but failed the entrance
exam…There happened to be some temporary positions open in my dad’s workplace,
and he asked me to take one.”
After a year of probation, Liang was smoothly promoted to an official position. Liang
admitted that the reason for getting his job was due to his father, who was the associate chief
in that council. In two working papers I have discussed the mechanism and consequences of
guanxi manipulation in details. Based on a comparison of the above two cases, here I want to
emphasize that guanxi manipulation did not change significantly during the transitional
process. My interview data show that the advantaged group in the state-controlled system
saw maintaining their offspring’s advantaged status within the system as a top priority,
instead of transferring this advantage into the market sector. The higher one’s family status
origin, the higher the quality of guanxi resources one could mobilize through family ties, and
thus the better one’s chance was to get an assigned job with guanxi assistance. Therefore, the
interplay of employment policies (downsizing assigned jobs) and individual reactions
(mobilizing family ties) has further strengthened the trend of elitism in the state-controlled
system, by maintaining the elite group’s advantages across generations. As a side effect, this
individual strategy has, to some degree, also coincided with the function of social capital in
the market economy, and thus facilitated individuals’ adaptation into the newly-emerged
labor market.
37
Above all, while the state’s leading role in China’s transitional process has been well
explained in the existing literature, my qualitative analysis articulates the formation of the
trajectory of the employment system change by focusing on individuals’ corresponding
strategies towards the state’s changing employment policies. In the process of the shift from
a state-controlled job assignment system to a free labor market, individuals viewed
maintaining an advantaged status in the state-controlled system as their goal. They
consistently strived to obtain an assigned job by pursuing higher educational degrees, joining
the party, and mobilizing guanxi resources, particularly family ties. These strategies further
raised the bar of entry for assigned jobs, which in turn, exacerbated competition for assigned
jobs. Therefore, I argue that the path of China’s employment system change is not solely
decided by the state, regardless of its ultimate power. It is reasonable to consider it an
interplay process, in which individual responses to state policies have played a significant
role in shaping the trajectory of the employment system change.
2.5. Consequences of the Interplay: Concentration of the Social Elite and Their Resources
2.5.1. Why Is a Quantitative Verification Legitimate?
A common critique of qualitative analysis lies in its difficulties of verification and
generalization. However, an indirect way to verify and generalize qualitative findings is
possible. Regarding my argument about the interplay process of the employment system
change, my strategy is thus to test the consequences derived from this argument, since the
interplay process is not directly verifiable. This strategy is legitimate only when the targeted
argument is a necessary and sufficient condition of the hypotheses that are directly tested. I
also want to reemphasize that my study is focused only on the time period of the abolishment
of the job assignment system. A discussion about the well-established labor market after
2003 is thus beyond the scope of this paper. Keeping these two points in mind, I develop my
hypotheses as follows.
In my qualitative analysis, I have articulated how individuals’ responses to the initial policy
change have re-shaped the changing path of state policies, which in turn stimulated
38
individuals’ further reactions. First, in terms of education, my qualitative analysis shows that
highly-educated job seekers preferred assigned jobs over jobs in the market, and
subsequently the investment in education increased over time because of the competition for
assigned jobs. Second, by joining the party, an individual tends to gain additional advantages
to access an assigned job. Third, a comparison between the last two cases in my qualitative
analysis suggested that the pervasiveness of mobilizing family ties in the state-controlled
system remained, despite the institutional change. These above three hypotheses are derived
directly from my qualitative analysis. In other words, my argument about the interplay of the
employment policies and individual reactions is the sufficient condition of the three
hypotheses.
On the other hand, the formation of labor market stratification and inequality as a
consequence of institutional change has been discussed in depth in the existing
socioeconomic-transition literature. However, as aforementioned, what remains puzzling is
the driving force of this consequence. Three explanations are available in the market-
transition debate, namely, the emergence of the market, the persistence of political power,
and the “co-evolution” of political power and the market. As my qualitative analysis reveals,
the change in the employment system cannot be solely explained by the emergence of the
market, because individuals invested in higher education with a direct goal of getting an
assigned job, instead of participating in labor market competition. This employment system
change cannot solely be attributed to the persistence of political power either, because,
clearly, individuals’ interest in accumulating political credentials increased only after the
competition for assigned jobs intensified. The only remaining explanation is thus the co-
existence of political power and market strength, as Zhou’s (2000) “co-evolution” model
stated. However, there has not yet been a single study that explains the working mechanism
of the “co-evolution” model. While state power and the market are regarded as competing
forces by economists19, my qualitative analysis from the individual perspective has explained
19 Classic economists advocated a self-regulating market free of any intervention (Smith 1903[1723-1790]; Ricardo; Malthus), and strongly oppose the state’s interference into economic life. Even for Keynesian economists (Keynes 2007[1936]), the market still plays a predominant role, though government intervention is allowable through adjusting monetary policies during recessions.
39
how the boundary between the state and market is blurred at the individual level. To
individuals, only benefits matter; to maximize benefits, individuals actively adapt their job-
seeking behaviors so as to make good use of advantages from both the state-controlled
system and the market. State power and market strength have thus been reinforced
simultaneously as the underlying forces that have co-shaped the path of the employment
system change. To summarize, here I have discussed all possible theoretical explanations of
the formation mechanism of the institutional change. Focusing on either the emergence of the
market or persistence of state power has been shown to be an incomplete explanation in my
qualitative analysis. The explanation of the co-existence of the state and market holds its
ground, only under the condition that one understands the institutional change as the
interplay of state policies and corresponding individual responses. This means that the
“interplay” explanation of the institutional change is the necessary condition of the
hypothesized stratification consequences.
Given the premise that the “interplay” argument is the necessary and sufficient condition of
the derived stratification consequences, the verification of those consequences is equivalent
to the verification of the “interplay” argument.
2.5.2. Hypotheses: Three Types of Successful Job Seekers and the Resource Distribution among Them
In the following quantitative analysis, I test the consequences of the employment system
change by focusing on the differentiation of qualifications among individual job seekers.
Differences among individual qualifications were minimized when the job assignment
system was the only legal employment channel open to all urban citizens, and then became
increasingly noticeable as the number of assigned jobs declined. Before the job assignment
system was completely abolished, there would be three types of job seekers. I call the first
type “job-assignment system winners,” including individuals who got jobs exclusively
through the job assignment system. The second type is “job-assignment system
referring to those who tried multiple job search channels, but eventually got jobs through the
job assignment system. The final type is called “job-assignment system outsiders,” referring
40
to individuals who eventually got jobs in the labor market, rather than in the job assignment
system.
My qualitative analysis suggests an unequal distribution of resources or qualifications among
‘job-assignment system winners,’ ‘job-assignment system opportunists,’ and ‘job-assignment
system outsiders.’ These groups will be called ‘system winners,’ ‘system opportunists,’ and
‘system outsiders,’ respectively, in the following parts of the paper. If individuals’
preferences towards assigned jobs persist and the declining trend of the job assignment
system intensifies the job competition, it is reasonable to hypothesize that ‘system winners’
should possess resources or qualifications that are the most desirable by the state, followed
by ‘system outsiders,’ and then by ‘system outsiders.’ Corresponding to the three types of
resources discussed in the qualitative section, I develop my hypothesis from three aspects.
First, with respect to education I hypothesize that:
Hypothesis 1a: Other characteristics being equal, highly-educated individuals are more
likely to be ‘system winners,’ whereas lowly-educated individuals are more likely to be
‘system outsiders.’
Market-transition scholars might want to argue that the emergence of the market mechanism
had bumped up the overall educational qualification for employment, so it was not surprising
to observe the significant effect of education on successful job search. However, this sole
“market mechanism” argument cannot explain why human capital was concentrated among
‘system winners,’ rather than ‘system outsiders.’ More importantly, in my qualitative
analysis I have clearly shown that individuals’ increasing investment in education primarily
for securing assigned jobs had raised the educational entry bar for assigned jobs, though the
job assignment system itself declined. Namely,
Hypothesis 1b: As the employment system change proceeds, the educational requirement for
being ‘system winners’ does not decrease, but instead, increases.
Regarding political capital, it is reasonable to hypothesize its concentration within the
instead of outside the system. Using party membership as an indicator of political capital, I
thus hypothesize that:
41
Hypothesis 2a: Other characteristics being equal, party members are more likely to be
‘system winners’ and ‘system opportunists,’ whereas non-party members are more likely to
be ‘system outsiders.’
By contrast with the “persistence of political power” argument, my qualitative analysis
shows that the importance of political capital was emphasized only when individuals could
not secure assigned jobs by only relying on human capital. Namely,
Hypothesis 2b: Other characteristics being equal, party members are more likely to be
‘system winners’ only in the later stage of the employment system change.
In terms of social capital, my qualitative analysis shows that the pervasiveness of mobilizing
guanxi resources for getting into the state-controlled system did not change with time.
Moreover, in the Chinese context, the guanxi resources seem, to a great extent, to be
embedded in family ties. It is thus reasonable to propose that those who could successfully
access the declining assigned job opportunities with assistance of guanxi resources were
usually from high-status family background. Namely,
Hypothesis 3a: The higher one’s status origin, the higher quality of family ties one can
mobilize, and thus the greater the chance there is for one to get an assigned job.
Moreover, since the employment system change does not seem to impact the role family ties
play in one’s job attainment in the state-controlled system, as shown in my qualitative
analysis, I hypothesize that:
Hypothesis 3b: The importance of family ties remains constant at different stages of the
employment system change.
2.5.3. Data and Measurements
Data used to verify the above hypotheses are drawn from the 2003 China General Social
Survey (CGSS) – the urban section, a four-stage stratified probability sampling survey on the
Chinese urban population. The sample consists of 5,894 adults, aged 18 to 69 years old, who
were randomly selected from 30 provincial-level locations. Because it is hard to define one’s
42
first ever job20, I focus on how one got the first job at his or her current workplace (or last
workplace for retired respondents). As mentioned in the Introduction chapter, the 2003 CGSS
data cover exclusively urban Chinese citizens with the registered residency (hukou) status. It
is undeniable that rural migrant workers have become a significant part of the urban labor
force. The existing literature (Han, Huang, Han, 2011; Lu and Pun, 2010; Qin and Huang, 2010)
focusing on rural migrant workers’ employment in the urban area has provided essential
understanding, regarding the positive role that rural migrants’ participation in the urban labor
force plays in accelerating the marketization process in urban China. However, in this
dissertation, I will focus on the urban workforce with hukou status only. This is because the
institutional context I focused on in this study is the employment system change. Since only
urban citizens with hukou status could benefit from the pre-reform job assignment system, it
is reasonable to limit the research object to this population, so as to show the impacts of the
abolishment of the job assignment system and emergence of the labor market on the same
social group. Bringing rural migrant workers into this study may be not only unnecessary, but
also faulty, considering it would make the focused population inconsistent before and after
the abolishment of the job assignment system.
The dependent variable is “types of successful job seekers,” which as I articulated before, can
be categorized into three groups— system winners, system opportunists, and system
outsiders. This variable was generated based on all jobs search methods one tried AND the
determinant method that led to one’s job search success. First, the respondent was required to
report all the channels he or she tried in the entire job search process. In addition to seven
options that were provided in the questionnaire, another three options were reported by the
respondents themselves. Among the total ten options, only ‘assigned by the government or
arranged by a governmental organization’ and ‘internal recruitment in a state-owned
organization’ were coded as job-assignment channels. All other channels were considered
outside-system channels, which could further be divided into two categories. Methods, such
as ‘replacing parent(s)/relatives’, ‘recommendation from others’, and ‘others offering a job
20 My qualitative interviews show that respondents usually had difficulty defining their first jobs. Some started to work while at school, some returned to school from work and then re-entered a career afterwards, and some claimed that their first jobs after school could not be considered “official” jobs.
43
without asking’, were coded as guanxi channels; while others, such as direct application,
employment services in the market, human resources exchange center, self-employed, and
job entry exams, were regarded as new, formal channels emerging with the labor market.
Second, the respondent was asked to report only ONE method that played a determinant role
in his or her job attainment. Although it is possible that sometimes each of the multiple
channels one used contributed equally into one’s job search success, asking the respondent to
decide which one was ultimately important is still meaningful. This is because when the
respondent could not decide on the most important job search channel, the common response
would be to follow the social expectation and provide the answer that one thought was the
“common sense”. Thus, this kind of responses did not bias, but on the contrary, reflected the
typical situation within the corresponding context. Three types of job search channels are
presented in the following Table 1.
Table 1. The Categorization of Three Types of Job Search Channels
Three types of successful job seekers were thus generated as follows:
Job-assignment system winners – In this group, respondents reported only the job-assignment
channel in the question for all of the used job search methods. They also chose the job-
assignment channel as the determinant method for their job attainment.
44
Job-assignment system opportunists – In this group, the job-assignment channel was
combined with either of the guanxi or market channel, or both of them in responses about all
of the used job search methods. However, respondents chose the job-assignment channel as
the determinant method for their successful job attainment.
Job-assignment system outsiders – In this group, responses for all of the used job search
methods might or might not include the job-assignment channel. More importantly, the job-
assignment channel was not reported as the crucial method for the respondent’s job
attainment.
Information in the 2003 CGSS was collected retrospectively, which allows researchers to
sequence each respondent’s life events in chronological order. By sequencing one’s
educational history, work history, and participation in the Party, I generated individual
characteristics before job entry. I used years of education to measure human capital, and
party membership to indicate political capital. The quality of family ties is closely associated
with one’s family background, which in this study was measured by the father’s highest
education and party membership, because of the lack of direct measures of the father’s
occupational status in the original questionnaire. However, arguably, those two indicators are
positively associated with the father’s occupational status, and can thus reflect one’s family
background to a great extent. Based on the information of the year of one’s entry into the
current workplace, the variable “era of job entry” was generated, corresponding to three
stages of the employment system change; namely, job entry before 1979, job entry between
1979 and 1991, and job entry between 1992 and 2003. Approximately one third of the total
sample fell in each historic period. (The distribution of the year of job entry is shown in
Appendix B.) I need to point out that to reveal the impacts of the temporal change in the
employment system, this study focused only on changes in the time dimension. Certainly,
changes have also occurred in the spatial dimension, which has been addressed in a separate
study about labor market inequality resulting from the differences of individuals’ job search
behaviors across geographic locations (Shen 2013).
Control variables, such as age, age square, and gender were included. I must point out that
based on the assumption that the obtained job is the best option one can achieve under the
45
limitation of one’s resources, controlling over the status or quality of the obtained job is not
only unnecessary, but also misleading. What matters in this study is not which job search
channel leads to the best job; but instead, how an individual positions him- or herself,
strategically utilizing the resources he or she possesses in order to achieve the best result for
this particular individual. A descriptive analysis on all variables used is presented in
Appendix C.
2.5.4. Descriptive Analysis
Corresponding to the qualitative analysis, Table 2 shows the frequency distribution of
respondents with and without above-high-school education by era of job entry. As Table 2
shows, among 5,894 respondents, only 640 of them (12% of the total sample size) attended
school for more than 12 years. Considering only 6% of the total labor force attended school
for more than 12 years throughout the country (with the rural area taken into account) by the
end of 200221, the percentage of 12% in the 2003 CGSS is in line with that of the total labor
force with above-high-school education in urban China22. The frequency distribution shows
that less than 6% of respondents who entered their jobs before 1979 attended school for more
than 12 years. This percentage increased to about 9% among respondents who entered their
jobs between 1979 and 1991, and sharply increased to almost 20% among those who entered
their jobs between 1992 and 2003. This corresponds to my qualitative analysis about the
increase in individuals’ investment in education, as the employment system change went on.
21
See Table 1-39 Educational Attainment Composition of Employment by Region. Pp. 48 in China Labour Statistical Year Book 2003, compiled by Department of Population, Social, Science, and Technology Statistics, National Bureau of Statistics, P. R. China. China Statistics Press. 22
The average educational level is significantly higher in the urban area than in the rural area.
46
Table 2. Frequency Distribution of Respondents with and without Above-High-School Education by Era of Job Entry, CGSS 2003, Urban Section
Era of Job Entry Education Before 1979 1979-91 1992-2003 Total High School or below 1,343 1,644 1,616 4,603 94.25% 91.13% 80.24% 87.79% Beyond high school 82 160 398 640 5.75% 8.87% 19.76% 12.21% Total 1,425 1,804 2,014 5,243
100.00% 100.00% 100.00% 100.00%
Table 3 shows the frequency distribution of party members in the urban labor force by the era
of job entry. The average percentage of 10.55% of party members in the 2003 CGSS
corresponds to that of 9%23 of party members in the total labor force throughout the country
by the end of 2002. The proportion of party members is only slightly higher in the first stage
of the reform than that in the pre-reform stage. The slow increase in the proportion of party
members in the urban labor force between 1979 and 1991 is correlated with the
aforementioned decreasing trend of college party members during this period found by Guo
(2005). The percentage of party members increased significantly from 9.9% at the first stage
of the reform to 12.5% at the second stage. This table supports my statement that individuals’
participation in the Party is motivated by individuals’ interest in getting assigned jobs as the
competition intensified. Otherwise, one cannot explain the increasing trend of the proportion
of party members, as the market principle – which is supposedly centered on human capital –
gradually replaced the job assignment system, where party membership plays a significant
role.
23
The percentage was derived from two sources: Sun Yingshuai. 2009. “The Change and Development Trend in the Membership Composition of the Chinese Communist Party.” The Newsletter of the China National School of Administration vol. 5. Available at http://myy.cass.cn/news/482499.htm. And Table 1-1 Main Indicators of National Labour Statistics. Pp. 3 in China Labour Statistical Year Book 2003, compiled by Department of Population, Social, Science, and Technology Statistics, National Bureau of Statistics, P. R. China. China Statistics Press.
47
Table 3. Frequency Distribution of Party Membership by Era of Job Entry, CGSS 2003, Urban Section
Era of Job Entry Party membership Before 1979 1979-91 1992-2003 Total Non-party member Freq. 1,277 1,602 1,717 4,596 % 91.34 90.10 87.51 89.45 Party member Freq. 121 176 245 542 % 8.66 9.90 12.49 10.55 Total Freq. 1,398 1,778 1,962 5,138 % 100.00 100.00 100 100
As shown in Tables 2 and 3, despite the increasing trends, both the percentage of respondents
with above-high-school education and that of party members are small, up to 2003. This is
because attending higher education and joining the Party are both merit-based. While
individuals need to pass a highly competitive entrance exam to get into post-secondary
educational institutions, they also need to go through a very strict, multi-stage procedure for
joining the Party. Because only a small portion of individuals can be selected for attending
higher education and/ or joining the Party, those with educational degrees or diplomas
beyond high school, those with party membership, and those who have both are considered
members of the social elite group. Although the preference towards assigned jobs is common
among urban Chinese citizens, my following analysis will show that only the social elite who
possess desirable educational and political resources, as well as high-status family
background, can obtain assigned jobs during the substitution of the labor market for the job
assignment system.
2.5.5. Distribution of Human Capital among Three Types of Successful Job Seekers
Results are shown in Table 4. All possible comparisons are all presented, for the purpose of
showing the differences between three types of successful job seekers directly. The baseline
model (Model 1) shows that, other covariates being equal, every one-year increase in
education improves: 1). the likelihood of being ‘system winners’ relative to ‘system
outsiders’ by 16% (=1/(e-0.149)-1); 2). the likelihood of being ‘system winners’ relative to
‘system opportunists’ by 6% (=1/(e-0.062)-1); and 3). the likelihood of being ‘system
opportunists’ relative to ‘system outsiders’ by 9% (=(e0.087)-1). Namely, individuals who
48
have the highest level of education are most likely to concentrate in the group of ‘system
winners,’ whereas those who have the lowest level of education are most likely to be ‘system
outsiders.’ Hypotheses 1a is thus substantiated.
With the interaction between education and era of job entry taken into account, Model 2
demonstrates the increasing educational qualification for being “system winners.” On one
hand, era of job entry shows significant effects in favor of the likelihood of being ‘system
outsiders,’ relative to the likelihoods of being either ‘system winners’ or ‘system
opportunists.’ This finding confirms the aforementioned employment system changing
process, in which the labor market had matured, accompanied by the declination of state-
assigned job opportunities. However, this macro changing trend did not prevent human
capital from flowing into the state-controlled system. Other covariates being equal, every
one-year increase in education itself improves the likelihood of being ‘system winners’
versus ‘system outsiders’ by 11% (=1/(e-0.102)-1). In addition, compared to individuals who
found jobs before 1979, every one-year increase in education brings a 7% (=1/(e-0.069)-1)
higher possibility of being ‘winners’ (relative to ‘outsiders’) for those who entered their jobs
between 1979 and 1992, and a 8% (=1/(e-0.08)-1) higher possibility of this odds ratio for those
who entered their jobs after 1992, other covariates being equal. The increase of educational
qualification among ‘system winners’ becomes even more obvious, compared to educational
qualification changes in the other two types of successful job seekers. Regarding the
likelihood of being ‘system opportunists’ versus ‘system winners,’ as shown in the Model 2
column in the center block of Table 4, education itself shows a significant effect in favor of
the odds of being ‘winners’ (coef.= -0.092), other covariates being equal. Although
coefficients of the interaction terms between education and each of the two job-entry stages
are not significant, the directions of coefficients indicate that the educational gap between
‘winners’ and ‘opportunists’ might have widened, when comparing job seekers who entered
their jobs from 1979 to 1992 to their counterparts who found jobs from 1992 to 2003. I then
turn to the odds ratio of being ‘system opportunists’ relative to ‘system outsiders,’ presented
in the Model 2 column in the right block of Table 4. It is clear that, with other characteristics
controlled, ‘opportunists’ have significant advantages in education (relative to ‘outsiders’)
only for those who got employed at the early stage of the employment system change, shown
49
as the significant coefficient of interaction for education and job entry between 1979 and
1992 (coef.= 0.142). The educational gap between ‘opportunists’ and ‘outsiders’ has
disappeared for those who got jobs between 1992 and 2003. Thus, the overall trend shows
that as the employment system change proceeded, the educational gap narrowed between
‘system opportunists’ and ‘system outsiders,’ whereas widened for the ‘system winner’ group
relative to the other two types. Hypothesis 1b is demonstrated. This finding confirms my
qualitative analysis. Namely, the increasing educational entry bar for the assigned jobs
should not be attributed to the emergence of the market, but to individuals’ active responses
to the changing employment system.
2.5.6. Distribution of Political Capital among Three Types of Successful Job Seekers
Model 1 shows that ‘system winners’ and ‘system opportunists’ possess significantly
political advantages over ‘system outsiders.’ Other covariate being equal, the likelihood for
party members being ‘system winners’ is 3.07(=1/(e-1.122)) times as high as for non-party
members, and the likelihood for party members being ‘system opportunists’ is 4.13(=e1.418)
times as high as for non-party members. This finding shows that political capital is
concentrated within the state-controlled system. Hypothesis 2a is thus confirmed.
Model 3 of Table 4 show interesting trends about the change in the importance of party
membership over time. First, there is a distinctive line between party members and non-party
members to become ‘system winners’ and ‘system outsiders’, and this distinction does not
change over time. As shown in the ‘system outsiders vs. system winners’ panel of Model 3,
other covariates being equal, the likelihood for party members becoming system winners
(versus being system outsiders) is 2.63 (=exp(-(-0.966))) times as high as that of non-party
members. Turning to the interaction between party membership and era of job entry, the non-
significant coefficients suggest that party members’ advantage relative to non-party members
in terms of the likelihood of being system winners is consistent over time. Second, there
seems to be a tendency, in which party membership becomes increasingly important for
one’s chance of becoming the ‘system winner’ (relative to ‘system outsiders’) over time.
Other covariates being equal, party members who entered their jobs between 1979 and 1992
50
seemed to be more likely to become ‘system opportunists’ (relative to ‘system winners’),
whereas their counterparts who entered their jobs between 1992 and 2003 presented a
tendency of being more likely to become ‘system winners’. On the other hand, the political
advantage of ‘system opportunists’ relative to ‘system outsiders’ is marginally significant for
those who entered their jobs between 1979 and 1992, but not for those who entered jobs after
1992. Those findings suggest that while political capital is always concentrated within the
state-controlled system, this concentration might have even been intensified at the later stage
of the institutional change, as the gap of political capital seemed to have widened between
‘system winners’ and ‘system opportunists,’ while narrowing between ‘system opportunists’
and ‘system outsiders’. This supports the increasing importance of party membership for
one’s chance of getting a job solely through the job assignment, as the number of assigned
jobs declined. Hypothesis 2b is confirmed.
2.5.7. Distribution of Family Ties among Three Types of Successful Job Seekers
Turning to the effect of family background, a striking finding is that the father’s education
has a significantly positive effect on the likelihood of being ‘system opportunists’ relative to
both ‘system winners’ and ‘system outsiders.’ Model 1 shows that every one-year increase in
the father’s education increases one’s chance of being a ‘system opportunist,’ relative to
being either a ‘system winner’ or ‘system outsider’ by 6% (=e0.056-1; e0.057-1), with other
covariates controlled. The father’s party membership also shows a marginally positive effect
(coef.= 0.29, α=0.1) for one’s chance of being a ‘system opportunist’ versus ‘system
outsider,’ other covariates being equal. These findings suggest that the father’s human capital
and political capital can be transformed to social capital that the corresponding individual can
mobilize to secure a job in the state-controlled system. Model 4 only includes the interactions
between the father’s education and eras of job entry, because an insignificant interaction
involving the father’s party membership is predicted, due to the weak contribution of this
variable. In Model 4, the interaction terms between the father’s education and two eras of job
entry do not show significant effects, which means that the influence of one’s family
background on one’s job search did not change with the employment system change. Thus,
similar to the job assignment system before the reform, the changing employment system
51
from 1979 to 2003 was accompanied with the influence of family ties on one’s successful job
attainment in the state-controlled system. Moreover, this trend remained consistent
throughout the whole period. Hypotheses 3a and 3b are thus demonstrated.
52
Table 4.Multinomial Estimates on the Likelihood of the Three Types of Successful Job Seekers, CGSS Urban Section, 2003
53
54
2.6. Conclusion and Discussion
By using China’s employment system change from the 1970s’ to 2003 as a case study, I
illustrate how an institutional change can be understood as a process co-constructed by
macro-level policies and micro-level individual responses. My focus on the individual level
shows that while the state had initiated the employment system change in urban China, the
trajectory of this institutional change was not solely determined by state policies. Perceiving
the persistence of the political authority, individuals saw state-assigned jobs as a safety net
and/or spring board, and thus made assigned jobs their primary job choices, at least when
entering jobs for the first time. They strategized in their job search schemes to create the best
chance to obtain assigned jobs.
My qualitative analysis shows that individuals pursued education actively upon the new
meritocratic requirements in the job assignment system. This corresponds to the rapid
increase in the proportion of the above-high-school respondents as the employment system
change advanced, shown in my quantitative analysis. This increase cannot be explained by
the market growth, because as Table 4 shows, the educational gap presented a widening trend
between ‘system winners’ and the other two types, while it had narrowed between ‘system
opportunists’ and ‘system outsiders.’
The increasingly intensified competition for the declining assigned jobs also pushed the
increase of individuals’ investment in political capital. Otherwise, one cannot explain the fact
that the proportion of party members did not decrease, but instead increase more rapidly at
the second stage of the reform, when the market economy was significantly strengthened.
Party members are indeed more likely to get assigned jobs by being either ‘system winners’
or ‘system opportunists,’ while non-party members are more likely to become ‘system
outsiders.’
What remains consistent during the institutional change is the mobilization of family ties for
obtaining an assigned job. The father’s human capital and political capital can be transformed
to guanxi resources that provide a shortcut for one’s access to an assigned job. Both of my
qualitative and quantitative analyses show that the better the family background, the greater
55
the chance is for one to become a ‘system opportunist’— achieving an assigned job not by
merely relying on job-assignment channels, but with assistance of other methods, i.e., the
father’s influence.
Putting my qualitative and quantitative analyses together, this study delineates the
employment system change from the individual perspective, through which individuals’
responses to the changing employment policies were brought to the front stage. Individuals’
interest in assigned job opportunities did not decrease, but had increased with the declination
of the job assignment system. Driven by their persistent preference towards assigned jobs,
individuals continuously invested in education, strategically accumulated political
credentials, and actively mobilized family ties in their job search processes.
Understandably, despite the common attempts, not everyone could successfully achieve those
resources. Those who managed to stay in the state-controlled system are only the social elite
who possess one or more types of desirable resources in terms of education, political capital,
and family guanxi resources. Although the existing literature (i.e., Wu and Xie 2003) has
clearly shown that market inequality increased exponentially, after the social elite started to
take advantage of the resources they accumulated in the state-controlled system to pursue
market benefits, there has not been a single study that specifically examined the role
individuals played during the formation process of social inequality. The absence of an
explanation at the individual level makes it difficult for one to understand how state power
and the market, as two seemingly contradictory driving forces of social stratification, have
co-developed during China’s transition.
This study shows that at the individual level the distinction between state power and market
strength gets blurred, as individuals make use of all possible means to optimize their job
search outcomes. What drives the stratification among individual job seekers during this
process is not simply the state’s changing policies per se; but instead, individuals’
perceptions of and responses towards those policies – motivated by their persistent interest in
the state-controlled job opportunities. The direct consequence of individuals’ responses is the
formation of the concentration of the social elite with desirable resources in the state-
controlled system before the job assignment system disappeared. This very small group of
56
social elite has thus gained the market premium, when they dabbled into the market with
advantages they further accumulated within the state-controlled system. Social inequality is
consequently intensified while both state power and the market economy are developed in
this process. Future studies are needed to further understand the co-development of the state
and market from the individual perspective.
Needless to say, the Chinese society has been going through another wave of fundamental
changes since 2003. What is presented in this study may not be in line with the latest trends,
particularly because of the occurrence of the latest series of reforms in the higher educational
system, the change in the Communist Party leadership, the rapid diffusion of the Internet, and
China’s unavoidable participation in globalization. However, the constructive perspective
with a focus on individuals exemplified by this study can be used in any historic and societal
context. As much as this perspective provides a new understanding of the formation of the
stratified social structure and the underlying mechanism of the co-development of state
power and the market in post-socialist China, it also has great potential to improve scholarly
understanding of social changes in China as well as around the globe in the new century.
57
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Chapter 3 The Value of Mixed Methods: How Does Certifiability of
Job Requirements Determine the Channels of Job-Person Matching?
3.1. Introduction
Since Granovetter’s (1973, 1974) seminal study about why personal ties are efficient
channels for matching employers and job seekers, informal job-person matching methods
have been widely studied in different societies. Although the advantages of the use of
informal channels have been well documented from both the employer’s and the job seeker’s
perspectives, the question “how do informal channels work?” still puzzles scholars. For
example, why do organizations seldom use informal channels alone in a hiring process,
despite the widely-acknowledged advantages of informal job-person matching (Marsden
1994a, 1994b)? From the job seeker’s side, why do the disadvantaged rely on informal
channels more heavily than highly skilled job seekers (Lin 1999)? Still, if the use of informal
channels does not necessarily have a causal effect on job search success (Mouw 2003), why
are informal channels so often used in many societies?
The reason that the existing literature fails to provide answers to the above questions can be
attributed to a common approach used in previous studies. Researchers treat informal and
formal job-person matching channels as mutually excluding alternatives, while employers
and job seekers often combine the two types of methods in reality. “[T]he formal and
informal routes to jobs, which we keep distinct in our statistics, get blurred in actual daily
practice.” (Granovetter, 1995:168) Thus, to understand the working mechanism of social
capital in reality, it is necessary to take into account the informal-formal-combined channel,
independent from the use of either the formal or informal channel alone.
This study makes an innovative attempt to theorize a typology of the use of job-person
matching methods, by focusing on the certifiability of the employer’s hiring requirements.
“Certifiability” means the extent to which a required qualification can be explicated,
quantified, and proven by an authorized third party. Some requirements (such as basic
knowledge for fulfilling the job) are certifiable by diplomas, degrees, certificates, or licenses,
while the others— such as loyalty, work ethics, career ambition, enthusiasm, and
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personality— cannot be certified easily. Formal procedures are often used if certifiable
qualifications are the focus of the job, while informal procedures tend to be more effective
and efficient when uncertifiable qualifications are the focus of the job. If a job position
requires both certifiable and uncertifiable qualifications, then both formal and informal hiring
procedures are needed. Following Marsden’s (1994a, 1994b) studies on organizational hiring
practices among American establishments, I divide an employer’s hiring process into two
stages – recruitment and selection. Because employers often shift their focuses between
certifiable and uncertifiable qualification assessment across two stages, as well as within
each stage of a hiring process, informal channels are often jointly used with formal channels,
instead of functioning alone.
I will illustrate the job-person matching theory in two steps. First, using case studies drawn
from my interview data collected in three representative Chinese cities, I will demonstrate
different types of successful job-person matching scenarios, in which job seekers perceive
employers’ hiring expectations differently. Second, under the assumption that a job seeker
always tries to match his or her qualifications to the employer’s expectations during a hiring
process, the job seeker’s certifiable and uncertifiable qualifications predict their choice of job
search methods. In the second step, I will use quantitative data from the 2003 China General
Social Survey to demonstrate a positive association between the certifiability of one’s
qualifications and one’s chosen job search channels. The survey results will show that the
patterns found in the qualitative analysis can be generalized to the population level.
3.2. The Effectiveness of Contact Use from the Job Seeker’s Perspective
Job seekers in various labor markets often use informal channels to find jobs, for example,
getting job information from acquaintances, mobilizing internal referrals, or relying on
external recommendations. Granovetter’s (1974) study of professional and managerial men
in Newton found that 55.7% of the respondents used contacts during job search, while
Marsden and Campbell’s (1990) study of a 1982 sample in the Indianapolis area found that
51.4% of respondents got their jobs through friends and relatives. According to Granovetter’s
(1995) review, the percentage of individuals who used contacts for job search varied between
30 and 40% in Britain in the 1980s, and this percentage reached 70 to 75% in Japan in the
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same period. In China, a survey conducted in Tianjin showed that 45% of the respondents
used informal channels to get their jobs (Bian 1997). A parallel study conducted in Singapore
shows that around 60% of respondents changed their jobs with the help of contacts (Bian and
Ang 1997).
Although job seekers often use informal routes to jobs, it is not yet clear when and how they
benefit from using contacts. On one hand, studies have shown positive effects of contact use
on: 1) facilitating information flow (Granovetter 1973, 1974; Lin and Dumin 1986), 2)
exerting influence on an organizational agent’s decision (Bian 1997; Bian and Ang 1997), 3)
providing social credentials to an individual (Fernandez and Weinberg 1996; Wegener 1991),
and 4) reinforcing the individual identifying and recognizing him/herself as a member of the
work organization (Erickson 2001, 2004). On the other hand, Mouw (2003) challenged the
causal relationship between contact use and one’s career success. According to Mouw
(2003), more qualified job candidates tend to have higher status friends, because people in
general make friends with others similar to themselves (the homophily principle). Thus,
although the qualified job seekers are able to access good contacts, their job search success is
due to their own strong qualifications. This homophily argument may explain why the
positive effects of contact use are not consistent in all studies. Studies found no significant
difference in job search outcomes between formal and informal channels in the Netherlands
and Germany (De Graaf and Flap 1988; Habich 1984; Volker and Flap 1999) and in Detroit
(Marsden and Hurlbert 1988). Using the 1981 Chicago Survey, Bridges and Villemez (1986)
found no effect of search method on income after controlling exogenous variables, such as
race, gender, and human capital, are taken into account. Given studies both showing and not
showing positive effects of using contacts, scholars no longer ask whether informal channels
are useful or not. Instead, “we should ask when social capital matters, how it matters, and
under what conditions.” (McDonald and Elder 2006: 522)
3.3. Linking Individual Search Behaviors to Employers’ Hiring Expectations
Since employers control job allocation, their hiring procedures determine which job search
methods are most likely to succeed. Thus, I begin with examining the hiring expectations on
the employer’s side. As Marsden and Campbell pointed out, “[w]hat search method will be
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effective for an individual is very much contingent on the methods of recruitment used by
potential employers.” (1990: 59) An employer’s goal is to hire a candidate who suits the
requirements of the job position the best. Following Marsden’s (1994a, 1994b) studies on the
wave of the National Organizations Study (NOS) in the early 1990s, I divide a hiring process
into two stages: recruitment (or extensive search) and selection (intensive search) (see also
Rees 1966; Barron and Bishop 1985). At the recruitment stage an employer’s goal is to
“publicize the availability of openings to qualified applicants and assemble modest
information about a pool of eligible persons.” (Marsden 1994b: 288) After a candidate pool
is generated, the employer would then evaluate all applicants by a variety of means, in order
to single out the candidate who matches requirements of the vacant position the best.
Eventually, “the staffing process ends with the negotiation of agreements between
organizations and employees.” (Marsden 1994b: 288)
Because a job position requires multiple qualifications, an employer often needs to use
multiple strategies in one or both stages. At the recruitment stage, formal channels— such as
advertisements and employment agencies— can be used to reach out to potential employees
who possess desirable certifiable qualifications. However, informal channels— such as
informal referrals from co-workers or business/professional colleagues— would be adopted,
if the employer prefers hiring candidates with certain uncertifiable characteristics. At the
selection stage, while formal procedures (such as screening, testing, and interviewing) are
used to evaluate candidates’ certifiable qualifications, informal methods (usually involving
reference-checking) are the most reliable way to gauge candidates’ uncertifiable
qualifications.
As Marsden (1994a, 1994b) observed based on the NOS data, although informal methods,
such as referrals from employees and reference-checking, are used most frequently, they are
more often used together with formal approaches rather than alone. Employee referrals are
the cheapest method of obtaining labor (Fernandez, Castilla, and Moore 2000; Fernandez and
Weinberg 1997; Rees 1966). However, a candidate pool generated through internal referrals
is usually small, since referrals are very likely to reach out to only a few potential candidates
who share similarities with themselves. This means that if the employer intends to hire a
candidate with the best certifiable qualifications, formal recruitment methods must be used to
“pump up” (Fevre 1989: 98) the size of the candidate pool so as to increase the possibility of
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recruiting the best qualified candidate. At the selection stage, reference-checking is often
used when a candidate with desirable qualifications is selected. References provide reliable
information about a job applicant’s uncertifiable qualifications (Fevre 1989; Grieco 1987).
Particularly, the use of internal referral increases the new employee’s loyalty to the employer
and reduces the turnover rate, by tying the new worker’s performance to the interests and
reputation of his or her sponsor (Jenkins 1984; Jewson and Mason 1986; Petersen, Saporta,
and Seidel 2000).
In other words, the employer’s hiring strategies are determined by the extent to which a
certain desirable qualification is certifiable in recruitment and in selection. Under the premise
that the job seeker’s search success is determined by the employer’s hiring strategies, I can
thus theorize successful job-person matching patterns, on the axes of certifiability of job
requirements and hiring stage.
3.4. Typology of Job-Person Matching Patterns: Four Basic Types and Their Illustrations
Despite the existence of infinite combination possibilities for job-person matching methods, I
will start with a two-by-two simple categorization based on two hiring stages and two ends of
the certifiability spectrum. Here, I borrowed Max Weber’s (2001[1949]) concept “ideal type”
to construct the job-person matching typology. As Weber (2001[1949]) pointed out, the word
“ideal” does not mean perfection; instead, it stresses certain elements common to most cases
of the given phenomena. An “ideal type” is not a perfect type, but represents a social
category with certain distinctive characteristics. As the two-dimensional typology (Table 5)
shows, in an ideal hiring process, in which stages of recruitment and selection are clearly
divided and the employer considers either only certifiable or only uncertifiable qualifications
at each stage, job-person matching must fall into one of the four scenarios, namely:
certifiable qualifications are desired at both recruitment and selection stages (Type I),
certifiable qualifications are required in recruitment with uncertifiable qualifications required
in selection (Type II), uncertifiable qualifications are preferred in recruitment with certifiable
qualifications referred in selection (Type III), and uncertifiable qualifications are desired at
both recruitment and selection stages (Type IV). Assume that the employer adopts formal
methods to evaluate applicants’ certifiable qualifications, and informal methods to evaluate
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uncertifiable qualifications in an ideal hiring process, and that job seekers are most likely to
succeed if they use methods matching the employer’s hiring strategies. Under these
conditions, job seekers use only formal channels in Type I, formal channels in recruitment
with informal channels in selection in Type II, informal channels in recruitment with formal
channels in selection in Type III, and only informal channels in Type IV.
Table 5. Four Ideal Types of Job-Person Matching Patterns
The Type I scenario is consistent with economists’ and educationalists’ explanation of labor
market success from the perspective of human capital. Studies conducted in the United States
(Alon and Tienda 2007) and United Kingdom (Goodman et al. 1997; Machin 1999; Themelis
2008) show that the impact of education on career success has remained positive and
moreover, this positive impact has become increasingly strong over time. “The shifting
meritocracy in higher education” (Alon and Tienda 2007) suggests that formal credentials—
particularly in higher education and highly-skilled fields— have become more important than
ever before. Under this approach, job-person matching is a process in which the job seeker’s
certifiable qualifications match up with the employer’s hiring expectations through formal
recruitment and selection procedures.
The Type II scenario can be illustrated by a case study about manufacturing workers’
employment in South Wales during the 1950s and 60s (Fevre 1989). Fevre (1989) found that
employers publicized job information using posts and newspaper advertisements only when
the labor supply was not sufficient. After a proper size of candidate pool was generated
through formal recruitment methods, however, employers made final hiring decisions
through informal channels. Those who had family members or relatives working in the same
factory were more likely to be hired. This is because employers aimed to attract as many as
possible qualified applicants in order to relieve the shortage of labor supply at the recruitment
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stage. However, once employers reached a large pool of candidates, their focus turned to
applicants’ uncertifiable qualifications, such as values of hard work and loyalty to the
employer, and subsequently changed to select employees through informal channels. In this
case, employers’ continuous “use of informal methods depended on occasional use of formal
methods to prime the recruitment pump” (Fevre 1989:98).
The Type III scenario often occurs when the employer is a small, private company, according
to Marsden’s (1994a) study on the organizational hiring behaviors. Small, private
organizations are likely to prefer a relatively small pool of candidates with certain
similarities, which are often uncertifiable. However, to single out the best qualified
candidate, the selection procedure would still be formal.
Finally, the Type IV scenario can be illustrated by Grieco’s (1987) case study on how
unemployed Scottish workers got jobs at steel factories in Central England through the
recruitment of state-run employment agencies. In this case, the employers’ hiring strategy—
relying on state-run employment agencies— was supposedly formal. However, instead of
publicizing job information broadly so as to attract potentially qualified candidates as many
as possible in the recruitment stage, the agencies chose to minimize the amount of
information available on the market. “[T]he kin-and-friends channel through the importance
of internal notification procedures and word-of-mouth spread of information” (Grieco
1987:121) became the major channel in the recruitment process. At the following selection
stage, those who had relatives or friends working in the factories were more likely to get
hired. The reason for this hiring strategy is that the employers’ top concern was whether or
not employees were hard working and willing to stay in the job. To reach job candidates with
the uncertifiable qualifications, the employers preferred a certain type of laborer from the
same location. In this case, the employer’s concern about employees’ work ethics and
willingness to stay in the jobs are uncertifiable. Those uncertifiable qualifications were
consistently considered in both recruitment and selection. This determines that kinship and
friendship ties – informal methods – were not only the major recruitment sources, but also
the main selection criteria.
Among the above four scenarios, job-person matching presents a completely formal pattern
when certifiable qualifications dominate the whole hiring process (Type I), while it presents a
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completely informal pattern when uncertifiable qualifications concern the employer
throughout hiring (Type IV). Type II and Type III – 50% of the job-person matching patterns
in an ideal hiring process – show that channels of job-person matching could differ at
different stages of a hiring process, depending on whether certifiable or uncertifiable
qualifications are dominant at each hiring stage. In short, the typology under the assumption
of an ideal hiring process indicates that not only does the joint use of formal and informal
job-person matching legitimately exist, but also its existence may be more pervasive than
scholars have realized.
3.5. Extensions of the Job-Person Matching Typology towards a Realistic Model
The reality is certainly more complicated than an ideal hiring process. On one hand,
recruitment and selection may not be distinctive in every hiring process; on the other hand,
the employer may not focus on only one type of qualifications at each hiring stage. Freeing
the first assumption simplifies the aforementioned typology, and thus does not require
additional discussion. Freeing the second assumption means that certifiable and uncertifiable
qualifications co-exist in either recruitment, or selection, or both. Thus, the four basic types
need to be extended accordingly.
Table 6 presents the extensions of Table 5, by allowing transferability between certifiable
and uncertifiable qualifications in each of the stages. Namely, it is entirely possible that both
certifiable and uncertifiable qualifications are evaluated in recruitment, or selection, or both
stages. The corresponding hiring strategy would subsequently display as a type of
combination of formal and informal channels. This, in turn, determines that job seekers need
to use formal and informal methods jointly in order to meet an employer’s hiring
expectations. This would consequently lead the “joint use of formal and informal job-person
matching” model to the second level; namely, formal-informal-joint matching within the
recruitment stage, or the selection stage, or both. In other words, the extended model means
that formal and informal job-person matching methods can be jointly used, not only across
hiring stages, but more importantly, also within each hiring stage.
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Table 6. The Expanded Typology of Job-Person Matching Channels in a Two-Stage Hiring Process
Recruitment Selection Single channel across two stages Formal Formal
Informal Informal Joint channel between two stages Formal Informal
Informal Formal Joint channel within two stages Formal + Informal Formal
Formal + Informal Informal Formal Formal + Informal Informal Formal + Informal Formal + Informal Formal + Informal
In the following section, I will illustrate this extended typology using empirical cases
observed in the labor market of post-socialist China. The context of China’s labor market
allows testing of the model across types of sectors and job tenure. China’s socialist market
economy includes a strong state sector and booming private sector (Oi and Walder 1999;
Zhou 2000). The co-existence of a state-controlled economy and a free market has also
diversified types of job tenure. In contrast with lifetime, permanent employment in the
communist era, a variety of contract forms can be found in the context of the transitional
economy. Using qualitative case studies, I will reflect on the theoretical model by discussing
corresponding typical cases across types of sectors and jobs. Following my case studies,
which aim to exemplify how the theoretical model really works in job-person matching
practices, I will then explore the generalizability of the model using representative
countrywide survey data.
3.6. Overview of the Qualitative Data
I conducted my field work in three Chinese cities, Beijing, Shenzhen, and Jiangyou, in the
summer of 2009. The three selected urban locations are representative examples of North
China, where the central government has the strongest influence, South China, where the
market economy started earliest and developed fastest, and West China, where the central
government’s control and market strength are both relatively weak, respectively24. By
24 More detailed descriptions about location-selection rationales are available upon request.
69
adopting the snowball sampling method, I composed a sample frame with up to 50
individuals in each city. However, to match up with the quantitative analysis in this study, I
only selected interview cases in which the informants were urban residents with the local
hukou status and got into their current workplaces no later than 2003. I also excluded self-
employed cases from this study. As a result, twenty-eight cases were used in this study,
including ten cases in Beijing, and nine cases in Shenzhen and Jiangyou, respectively.
Descriptions of interviewees’ characteristics are provided in Appendix A.
As Appendix A shows, the youngest cohort (aged 30 and under) was oversampled. This is
because the influence of the state-controlled job assignment system under the socialist regime
did not completely fade away until early this century. Although studies (Bian 1997, 2001,
2002) have shown that guanxi (social relations) might have been mobilized for a better
assigned job, it was not uncommon for one to get a job without active search under the job
assignment system. Particularly, the older the respondent is, the more likely it is for his or her
case to fall into the “no search” category. By contrast, this would not be a concern for
individuals who entered the labor market from 2000 onwards, by which time even job
positions in the public sector became competition-based, instead of need-based.
Oversampling the youngest cohort gives rise to significantly greater proportions of
respondents with university degrees and of respondents who entered their current jobs after
1992, which serves the purpose of this study by increasing the variation of job-person
matching patterns. As a result, my informants consisted of 58% males and 42% females. 43%
of informants were below thirty years old, 30% of them were between thirty and forty years
old, and 27% of them were above forty years old. 64% of the informants had some higher
education; in fact, 48% of them had graduate degrees. 48.5% of the informants were party
members.
Among the twenty eight cases, twelve cases (43%) reported using formal and informal search
behaviors jointly in their searches, including: two cases (7%) of using informal channels in
recruitment with formal channels in selection, seven cases (25%) of using both formal and
informal channels in recruitment with only formal channels in selection, and the three others
(11%) using formal-informal-joint channels in both recruitment and selection. Fourteen
(50%) respondents reported using only formal channels throughout their searches, consisting
of five cases (18%) getting assigned jobs through the state-controlled system and the
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remaining nine (32%) competing for publicly available jobs in the market. Only two
respondents (7%) reported solely relying on informal channels for getting their current jobs,
among which one of them first found internships in the government before they got current
permanent jobs, while the other one found a job in the private sector. The distribution results
are presented in Table 7.
Table 7. Types of Job-Person Matching Patterns among Twenty-Eight Interviewees
Recruitment Selection Freq. (%)
Sub-types Freq. (%)
Single channel across two stages Formal Formal
14 (50%)
Assigned jobs from the state
5 (18%)
Jobs obtained from the market
9 (32%)
Informal Informal 2 (7%)
Joint channel between two stages Informal Formal 2 (7%)
Joint channel within two stages
Formal+ Informal
Formal 7 (25%)
Formal+ Informal
Formal+ Informal
3 (11%)
Total 28 (100%)
Despite a modest number of interview cases, Table 7 suggests an interesting trend. Namely,
individuals who solely relied on formal job search channels are the majority (50%), while
those who got jobs completely through informal channels constitute the smallest portion of
active job searchers (7%). The more common use of informal channels is seen in certain
combinations with formal channels. The most popular combination is to use formal and
informal channels jointly only in recruitment, constituting 25% of the total cases. Using joint
channels in both recruitment and selection make up 11% of the total cases. There are also
two cases (7%) reporting using informal channels in recruitment while formal channels only
in selection.
It is noticeable that the job-person matching patterns presented in my qualitative data reflect
three out of four basic types in the original typology. The Type II scenario – formal methods
in recruitment with informal methods in selection – is not found in my case studies. In the
aforementioned example of manufacturing workers in South Wales (Fevre 1989),
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uncertifiable, instead of certifiable, qualifications were the employers’ major concern; formal
recruitment methods were used only when labor supply was insufficient, for the purpose of
attracting as many as possible applicants with minimum certifiable qualifications.
Employment in the current labor market of China is a completely different story, however.
The unemployment rate in China has never gone below 4%25 in the last decade, according to
the official record. Not just the poorly-educated struggle to become employed; university
graduates are also faced with difficulties in getting jobs. According to a report (Cai and
Wang 2009) issued by the government-controlled media, the first-time employment rate
among university graduates was 72.6% in 2005, and has further deteriorated since then. In
2009, the estimated number of unemployed university graduates reached two million
throughout the country. Within the context of labor oversupply – especially the oversupply of
the highly-educated labor force, certifiable qualifications can hardly be completely
overlooked in selection, particularly when certifiable qualifications are essential at the
recruitment stage.
Despite the absence of the Type II scenario from the Chinese context, a fiercely competitive
labor market urges individuals to maximize their job search efforts to meet the employer’s
hiring requirements. Thus, it provides an ideal context to observe how individuals strategize
in job searches, by using formal and informal methods jointly. In the following analysis, I
will analyze the job-person matching process from the job seeker’s perspective; namely, how
they perceived and interpreted the employer’s hiring requirements, and how they strategized
in their job search so as to obtain jobs successfully. I will start with the scenarios of Type I
and Type IV, in which either formal or informal methods are used throughout the hiring
process. My elaboration on the joint use of formal and informal job-person matching
methods will be based on the Type III scenario and its extensions in real hiring practices.
25
Data can be retrieved from the China Labour Statistical Yearbook – 2003-2012. Available at: http://www.molss.gov.cn/gb/zwxx/node_5435.htm
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3.7. Formal Channels Only versus Informal Channels Only: A Perspective of Certifiability
The case of Ms. Hua Lu26, a 33-year-old assistant professor, who entered her current
educational institution27 in 2003, shows that when certifiable qualifications dominate the
employer’s concern, formal methods dominate in the matching process. The academy, as a
state-controlled institution responsible for training high-rank governmental officials and
cultivating the future leadership of the Communist Party, is concentrated with political
power. Hiring in this organization is presumably highly exclusive and is only open to
applicants who have recommendations from internal referrals. Indeed, the hiring process for
Hua’s position was full of guanxi’s (social relations’) influence. As Hua said,
“I guess our department head needed someone to do real work. If he had hired some
people through guanxi, he couldn’t get the work done. He said to me once that hiring
me was not easy and that he actually bore some pressure (in order to hire me).”
Guanxi provides a reliable channel for the employer to scrutinize an applicant’s uncertifiable
qualifications. However, in this case an applicant’s certifiable qualifications are far more
important than uncertifiable ones. Hua graduated with a Ph.D. degree from the best program
within the country, which made her stand out of the candidate pool with a competitive
academic background. Moreover, during a multiple-stage screening process, Hua was ranked
at the first place not only among the applicants for the position she applied for, but also
among all applicants for all positions offered by the academy in that year. Between one
candidate with excellent certifiable qualifications and others with powerful guanxi, the
employer chose the former and turned down guanxi. In short, when the employer aims to hire
a candidate with the best certifiable qualifications, job seekers’ sole reliance on formal
methods would be appropriate.
The case of Mr. Jie Wang, a 23-year-old leader of the security team in a prestigious gated
community in Shenzhen, presents an opposite story. After dropping out of school at grade 9,
26
All names used in this study are pseudonyms to protect interviewees’ confidentiality. 27
The name of the city is omitted to protect the interviewee’s confidentiality.
73
Jie had a difficult time to find a job. In 2003, Jie’s brother knew a former classmate working
as the head of the repair team in the property management office of this gated community.
Through his help, Jie was introduced to the former head of the security team. Jie was then
hired as a security guard upon the team leader’s approval, and worked his way up since then.
Despite its low socioeconomic status, Jie’s position could still be very attractive to rural
migrant workers who would have worked in sweatshops otherwise, for its relatively higher
salary and nice working environment. It is not hard to imagine that the number of applicants
would be enormous if the company had publicized the job vacancy. However, the employer
had no interest to do so. First, a security guard position does not need highly certifiable
qualifications. Also, the employer’s expectations of applicants’ uncertifiable qualifications,
such as trustworthiness, sense of responsibility, and willingness to help home owners, are
very high. Under this condition, formal recruitment would not bring in the right candidates.
Instead, informal recommendation, particularly through a relatively high-status internal
reference, is strongly preferred.
The above two cases show that formal job-person matching occurs when certifiable
qualifications dominate the employer’s hiring requirements, while informal job-person
matching would be successful when certifiable qualifications are relatively irrelevant. Most
often, however, both certifiable and uncertifiable qualifications are expected for a job
position, which requires a certain combination of formal and informal matching channels.
3.8. Illustration of the Type III Scenario
As shown in the above Table 7, two out of twenty eight job-person matching cases fit the
Type III scenario exactly, where the individual reached the employer through informal
recommendation, and then was hired through a formal selection process. Using the case of
Mr. Lei Yang, a forty-year-old departmental manager, one can clearly see how the
certifiability of job requirements determines the channels by which the employer and job
seeker come together. Lei currently manages a research team in a booming foreign-invested
company, YICT, which operates the largest-scale container terminals in the local harbor.
Prior to his current job, Lei had multiple years of work experience, and also went back to
school to obtain a Master’s degree in his field. Driven by his career ambition, Lei set up a
goal to get a managerial position in YICT, the leading company in his field, though there was
74
no such position open in the company at that time. What Lei did was to ask a senior
schoolmate, Mr. Zhao, who was a senior manager in a related company, to call up Mr. Wang,
the manager of the R&D department in YICT, asking if they were hiring. Upon Zhao’s
recommendation, Wang said, “OK, then, let me check him out. If he’s qualified, I can open a
position for him.” Subsequently, Lei had an interview with Wang, who was impressed with
his knowledge in the shipping field. Wang then took Lei to see his supervisor, Mr. Zhang –
the administrative deputy general manager, who found that what Lei could do was actually
very important for the company. With Zhang’s permission, Wang opened a new position for
Lei. Lei then started to work as an associate manager in the R&D department of YICT in
2001.
Unlike jobs that only require entry-level certifiable qualifications, the R&D managerial
position in YICT needs outstanding, highly specialized knowledge, which allows the
manager to think ‘from the big picture’ and design creative development strategies. This
requirement is beyond certifiable qualifications measured by an educational degree or the
number of years of work experience. For this reason, generating a large pool of applicants
through formal recruitment channels would not necessarily bring in a right candidate.
However, through a third party’s recommendation, the employer can reach a promising
candidate directly.
The point one must bear in mind is that not all recommendations from the third party would
be equally effective. What types of references the employer relies on is determined by what
types of uncertifiable qualifications the employer is looking for. If the employer aims to find
new employees sharing similarities with the current employees, internal referrals would be
the most suitable way, as illustrated by the aforementioned cases of Scottish migrant workers
in Central England (Grieco 1987) and manufacturing workers in South Wales (Fevre 1989).
If the required uncertifiable qualifications are related to reliability or trustworthiness, a
recommendation from a reliable reference is needed. This corresponds to Jie’s case, in which
the security-guard leader extended his trust on his colleague – the repair team leader – to Jie,
the job applicant who was recommended by the repairmen leader. In Lei’s case, uncertifiable
qualifications desired by the employer are clearly focused on a candidate’s productivity and
creativity, which are not shown on the resume. Only because of this does a recommendation
from an expert in the same field matter.
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Although an informal recommendation secured the first interview opportunity for Lei, it is
his own outstanding expertise, as shown in the screening process, which eventually won the
position for him. In this hiring process, informal recruitment and formal selection
complement each other, so that the right candidate can be singled out in the most efficient
way. On one hand, an informal recommendation reduces the employer’s recruitment costs to
a minimum. To achieve the same goal, a public, formal recruitment method, often involved
with disseminating a job post, generating a candidate pool, and then singling out potential
employees from the pool, would be far more expensive. On the other hand, a formal
interviewing process, which is focused on evaluating one’s certifiable qualifications, can also
verify the person’s uncertifiable qualifications recommended by an expert contact. As
aforementioned, in Lei’s case, uncertifiable qualifications – potential working abilities – are
built upon certifiable ones, so that it is reasonable to say that Lei’s uncertifiable
qualifications are the extension of his certifiable qualifications. Because of the inherent
correlation between uncertifiable and certifiable qualifications required by the employer,
informal and formal channels can serve a common goal, though they are used at separate
hiring stages.
3.9. Joint Use of Formal and Informal Strategies in Both Recruitment and Selection
Not all uncertifiable and certifiable qualifications are closely linked together, as they are in
Lei’s case. Very often, the employer needs to consider both types of qualifications in each of
the hiring stages. When it happens, the joint use of formal and informal job-person matching
methods takes place. In this section, I will use a case study to illustrate the most complicated
scenario in which formal and informal channels are jointly used in both hiring stages.
Mrs. Yun Chen, a 30-year-old office head working in a branch of Bank of China (BOC
hereafter) admitted that without informal help, she could not have entered the BOC in 2002.
Through a good friend’s husband, Yun managed to connect with a high-rank manager who
was affiliated with the hiring BOC branch. According to Yun, only because the high-ranking
contact put in a word for her could her application get attention from the recruiters. As she
said:
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“There are so many applicants. Everyone holds a Bachelor’s or Master’s degree in
economics, finance, or other disciplines (that the bank would be interested in)… If
you want to make your resume stand out, you must have someone (important to the
bank) put in a word for you.”
Yun’s remarks have two implications. First, every applicant needs to hold “a Bachelor’s or
Master’s degree in economics, finance, or other disciplines,” in order to be eligible to apply
for the position in the bank. Second, holding a required degree does not necessarily mean that
the applicant fits the bank employer’s hiring expectations, since a reference’s
recommendation plays a crucial role for one to get through the first-round screening. This
implies that the bank employer considers both certifiable and uncertifiable qualifications at
the recruitment stage. Certifiable qualifications – an educational degree in this case –
certainly determines whether or not one is eligible to apply for this position at BOC. Under
the premise that everyone who applied possesses certifiable qualifications desired by the
bank, the recruiters tried to narrow the candidate pool by using informal channels to screen
applicants’ uncertifiable qualifications. When asked why a reference was important for her
successful job application at the bank, Yun said:
“People (job seekers) have to understand that it’s not like if you are the best
candidate, you must be hired. Doesn’t work that way… It also depends on if you are
suitable for this position.”
In Yun’s opinion, a good contact provides rich information about an applicant’s suitability
for the job position, because a good contact knows what qualities the employer desires.
“I was told (by my reference) that the bank wouldn’t hire those who like to stand out,
because a bank doesn’t need this type of people. The work at a bank is not necessarily
challenging. So, he (my reference) recommended me as a good employee who is down
to earth and willing to do tedious work.”
Work in a bank is often “tedious” and not “challenging.” For this reason, a bank employer’s
ultimate concern is not an applicant’s meritocratic achievements, but his or her “down-to-
earth” work ethics and willingness to do long-term, tedious work. Those qualifications are
uncertifiable, and can hardly be evaluated reliably by formal means. A reference’s
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recommendation thus becomes a relatively more effective way. Working closely with the
bank, Yun’s reference knew exactly what kind of recommendation he should put for Yun.
Furthermore, his high status made his recommendation reliable. It is reasonable for the
recruiters to believe that the applicant recommended by this prestigious internal reference is
well connected to the bank, and thus would be more committed to working there in a long
run.
After the recruitment stage, it took Yun one round of written test and two rounds of
interviews with different levels of bank mangers to get her job offer. However, Yun pointed
out that a reference also plays a role in the screening process.
“The whole process of interview and examination is very objective. The bank also
fears to recruit some very useless people, (who) would be very troublesome. After the
objective evaluation, they (the bank) would evaluate your guanxi [relations in
Chinese term] with the bank, by scaling your reference’s relationship (with the bank),
and the relationship between you and your reference. If you are far below the
qualifications, and your guanxi is just so-so, you must be screened out. If you yourself
are at the medium level (in terms of personal qualities), and your guanxi is strong –
for example, your parent or your direct relative works at the managerial level in one
of our branches – you must be screened in.”
Namely, the selection process in the bank is also a combination of formal and informal
strategies. While the written test and interview are direct evaluations of the candidate’s
professional knowledge – certifiable qualifications, the evaluation about the candidate’s
reference shows the importance of a candidate’s uncertifiable qualifications in the bank’s
hiring. The bank employer evaluates each candidate’s uncertifiable qualifications by ranking
the reference’s “guanxi” with the bank and the candidate’s “guanxi” with the reference. The
higher the reference’s status within the bank system, the stronger the guanxi between the
reference and the bank, and thus the more reliable the recommendation is about the
candidate’s uncertifiable qualifications. Meanwhile, the closer the guanxi between the
applicant and the reference, the better the reference knows the applicant, and thus the more
detailed information the internal recommendation contains about the candidate’s
uncertifiable qualifications. A hiring decision is eventually made based on an integrative
78
calculation of an applicant’s certifiable qualifications (shown through the objective score
during formal recruitment) and uncertifiable qualifications (evaluated through a guanxi-based
screening system).
Above all, my qualitative analysis demonstrates that the variation of job-person matching
patterns can be explained by the certifiability of job requirements that the employer is
focused on at the stages of recruitment and selection, respectively. My analysis shows that
the employers’ sole focus on certifiable qualifications will lead to the use of formal channels,
while their sole focus on uncertifiable qualification will lead to the use of informal channels,
throughout recruitment and selection stages. If both certifiable and uncertifiable
qualifications are expected in recruitment and/or selection, the joint use of formal and
informal hiring channels would occur in the corresponding stage. However, this is only a half
of the story. A job-person matching process involves both the employer’s hiring strategies
and the job seeker’s search behaviors. To verify the theoretical “job-person matching” model,
it is necessary to examine whether the certifiability of qualifications can also explain job
seeker’s search behaviors. Using the countrywide survey data, in the following section, I will
thus shift my focus from certifiability of qualifications expected by the employer to
certifiability of qualifications possessed by the job seeker.
3.10. How Does the Certifiability of Qualifications Determine One’s Search Behaviors?
Individual certifiable qualifications commonly include educational degrees, transcripts,
expertise certificates, and occupational licenses. For Chinese job seekers, however, an
additional type of certifiable qualification is membership in the Communist Party. Joining the
Party was once the symbol of one’s merits in the communist era. Although the ideological
importance of being a party member has faded since the socioeconomic transition started, the
importance of political credentials remains, particularly when it comes to positions that
exercise decision-making authority (Walder, Li, and Treiman 2000). Thus, party membership
still connotes desirable qualities in a job seeker, such as organizational and communication
skills, team spirit, and the capability to get things done, as Guo (2005) argued in his study on
the Party’s recruitment of college students in the last several decades. As for individual
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uncertifiable qualifications, as shown in the above qualitative analysis, getting help from a
right contact enables the individual to demonstrate his or her suitability for the job position.
Based on the association between certifiability of qualifications and the use of job-person
matching channels shown as above, I hypothesize that:
An individual with high certifiable qualifications leans towards using formal job search
channels, while one with high uncertifiable qualifications leans towards using informal job
search channels. For those who possess both certifiable and uncertifiable qualifications,
formal and informal job search channels are expected to be used jointly.
3.10.1. Data and Measurements
To demonstrate the above hypothesis, I used data drawn from the 2003 China General Social
Survey (CGSS) — the urban section, a four-stage stratified probability sampling survey on
the Chinese urban population. The sample consists of 5,894 adults, aged 18 to 69 years old,
who were randomly selected from 30 provincial-level locations. The dataset suits this study
well, because it includes retrospective information about how one got into his or her current
workplace and measures of one’s certifiable and uncertifiable qualifications at job entry.
Descriptive analysis of the quantitative data is shown in Appendix C.
Each respondent was asked to report all job search methods used. The options ‘replacing
parents(s)/ relatives,’ ‘recommendation from others,’ and ‘others offered a job without
asking’ were coded as informal channels, while all other options were coded as formal
channels, including: methods under the pre-reform job assignment system, such as ‘assigned
by the government or arranged by some official organization,’ and ‘internal recruitment in a
state-owned organization’; and methods used in the newly emerged labor market, such as
‘direct application,’ ‘employment services in the market,’ ‘human resources exchange
centre,’ ‘self-employed,’ and ‘job entry examination’. Based on all reported methods,
respondents’ job search behaviors were coded into three categories, namely, formal-informal-
joint channels, formal channels only, and informal channels only. To verify the information,
each respondent was also asked how they collected job information, and whether or not they
received help from someone else in the process of getting their current job. If a respondent
did not report any informal job search method in the first question, but reported using
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informal connections for collecting job information and/or getting help from someone else
for job acquirement, this case would be recoded from “formal channels only” to “formal-
informal-joint channels.”
Certifiable qualifications, as aforementioned, include education (measured by years) and
party membership (with party members coded 1 and non-party members coded 0). As for
uncertifiable qualifications, I use the family status origin as the measure for two reasons.
Firstly, one’s personality, values, and habits, which are direct indicators of uncertifiable
qualifications, are determined by parental influence, to a great degree. On the other hand, the
quality of social resources one can access through family ties also varies with one’s status
origin. If one’s uncertifiable qualifications are explicated to the employer mainly through
informal channels, job seekers from low-status family backgrounds would bear more
challenges in meeting the employer’s expectations for uncertifiable qualifications, due to the
lack of high-quality contacts. This is particularly the case for individuals who entered the
labor market for the first time. Considering the patriarchal culture in the Chinese context, I
thus use the father’s education and party membership to measure one’s family status origin,
due to the absence of the father’s occupational status in the survey data. Another crucial
indicator of qualifications is one’s work experience. Under the assumption that an individual
accumulates both certifiable and uncertifiable qualifications at work, I argue that one’s years
of work experience is the indicator of both certifiable and uncertifiable qualifications. In
addition, gender, age, age square, and era of job entry are controlled.
3.10.2. Results
Results from multinomial regression models are shown in Table 8, with all possible
comparisons between the three types of job search methods presented. First, individuals who
possess the highest degree of certifiable qualifications are more likely to only use formal
channels. Years of education increase the likelihood of the use of “formal channels only”,
relative to “informal channels only” and the joint channel category. It also has a significantly
positive effect on the likelihood of using the joint channel category, relative to “informal
channels only”. Namely, as one’s education decreases, one’s preference of job search
methods moves from “formal channels only,” to “joints channels,” and then to “informal
channels only.” Similar to the effects of education, being a party member increases the
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likelihood of the use of “formal channels only”, relative to “informal channels only.”
Although its effect is only marginally significant, party membership displays an impact in
favor of the joint channels versus “informal channels only”. Namely, for a party member, the
most preferred job search channels are “formal channels only,” followed by “joint channels,”
and then by “informal channels only.”
Second, “years of work experience” exerts significantly positive impacts on “informal
channels only” and “joint channels,” relative to “formal channels only.” However, one’s
work experience does not make a difference between one’s possibilities of using joint
channels and informal channels only. This finding suggests that individuals accumulate both
certifiable and uncertifiable qualifications at work, but work experience seems to benefit the
growth of uncertifiable qualifications more than that of certifiable ones. Consequently, work
experience leads one towards relying on informal channels more than formal channels in
one’s later job searches.
Third, one’s family status origin, closely associated with one’s uncertifiable qualifications,
presents a tendency of increasing the likelihood of the use of joint channels. Other covariates
being equal, every one-year increase in the father’s education increases one’s possibility of
using joint search channels by 21% (coef.=0.021; p=0.041), relative to that of using formal
channels only. Although marginally significant, the father’s party membership shows a
tendency of facilitating the use of joint channels, relative to using informal channels only
(coef.=0.214; p=0.087). Interestingly, one’s family status origin, the indicator of one’s
uncertifiable qualifications, does not show a positive impact on the likelihood of using
informal channels only, relative to formal channels only, since neither the father’s education
or the father’s party membership shows a significant coefficient in the first column of Table
8. Thus, the impacts of one’s family status origin support my argument. Namely, the positive
effect of social capital does not show when the informal channel is used alone, but shows in
the joint channel in which informal search methods are combined with formal search
methods.
In short, the above results show that: 1). certifiable qualifications indeed increase one’s
reliance on formal channels; 2). uncertifiable qualifications facilitate the use of informal
channels in the form of joint use, rather than the use of informal channels alone. As a result,
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individuals with the highest degree of certifiable but low uncertifiable qualifications tend to
use formal channels only. Individuals with both certifiable and uncertifiable qualifications
tend to use formal and informal channels jointly. Those with low certifiable qualifications
tend to use informal channels solely. However, this does not mean that they have a high level
of uncertifiable qualifications, because uncertifiable qualifications do not increase the
likelihood of using informal channels only, but that of using informal channels in a
combination with formal channels. This finding explains the existing literature in social
capital and job search. As Lin (1999) pointed out, the disadvantaged in the labor market are
observed to use informal job search the most, though they do not possess high-quality social
capital.
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Table 8. Multinomial Logistic Regression on Job Applicants’ Search Behaviors, CGSS Urban Section, 2003
3.11. Conclusion and Discussion
From the perspective of certifiability of qualifications at the stages of recruitment and
selection, in this paper I first theorized four basic types of job-person matching patterns.
Namely, if the job requirements only involve certifiable qualifications, formal channels
would be solely used throughout the hiring process; on the contrary, for a position that only
requires uncertifiable qualifications, only informal channels would be used in a hiring
process. When both types of qualifications are required, formal and informal channels would
84
then be used jointly. I further extended the four basic types to a more realistic model, in
which certifiable and uncertifiable qualifications may co-exist within each hiring stage. Data
collected in the labor market of post-socialist China show that from either the employer’s
side or the job seeker’s side, formal and informal job-person matching channels can indeed
be used separately, but what occurs more frequently is the joint use of formal and informal
channels.
Returning to the questions raised at the beginning of this paper, my qualitative data show that
the employers seldom use informal hiring channels alone despite their advantages, because
for the majority of job positions, a certain degree of certifiable qualifications are always
required, which makes formal hiring channels unavoidable. On the other hand, my
quantitative data from the job seeker’s side confirm that uncertifiable qualifications facilitate
the use of informal job search channels in a joint form, rather than being used alone. This
explains why the disadvantaged in the labor market are observed to rely on informal channels
more than their competitive counterparts do. That is, their reliance on informal channels does
not necessarily imply high-quality contacts, but simply means that they have limited choices
for job search methods due to their disadvantages in certifiable qualifications.
Unlike the conventional measure of jobs in a socioeconomic sense, certifiability of
qualifications adopted in this study does not measure one’s job search success by salaries or
social status. Presumably, everyone chooses the best job that is available to them, which
means every acceptance of a job offer is the best outcome for this particular individual. By
using the measure of certifiability, this study evaluates job-person matching channels only by
matching success. This perspective is particularly important to address the long-lasting
causality issue in social capital studies. While it is practically infeasible to decouple the
effects of job search methods on job-attainment outcomes from those of individual
characteristics, it is effective to evaluate the likelihood of matching success that each job
search channel brings, as exemplified in this study. Thus, while the causal effects of contact
use on job search success is challenged by the “homophily” principle (Mouw 2003), a
perspective of job-person matching in terms of certifiability of qualifications provides solid
evidence of the positive impacts of contact use on matching success. Because certifiable and
uncertifiable qualifications are both required for the majority of job positions, job seekers
whose qualifications enable them to activate both search channels should have a better
85
chance to succeed. Indeed, their certifiable qualifications may not be at the top level, but are
sufficient to meet the employer’s requirements for the job position. Meanwhile, they are also
able to demonstrate their uncertifiable qualifications through informal channels. Therefore,
the use of contacts indeed plays a positive role in job-person matching, but very often in a
combination with the use of formal channels, instead of functioning alone. This study thus
sheds light on a new approach to address the causal effect of contact use on instrumental
activities, such as job search.
A caveat is that, as aforementioned, the labor market in the present Chinese society is
characterized by labor oversupply, especially the oversupply of university graduates. Under
this particular context, competition with respect to certifiable qualifications may be more
intense than that in a market where job positions outnumber applicants. This may be the
fundamental cause of the absence of a case in the Type II scenario— where only formal
channels are used in recruitment whereas only informal channels are used in selection— in
my qualitative analysis. Also, this fact may be related to the finding that uncertifiable
qualifications increases the likelihood of the use of joint channels, rather than using informal
channels alone, as shown in my quantitative analysis.
Despite that, the innovative perspective – certifiability of job requirements adopted in this
study has theoretical implications in the literature of job search studies. As I mentioned
before, the question facing current scholars is not “whether or not there is a causal effect of
contact use on labor market activities,” but “how the causal effect of contact use functions in
the empirical world.” The perspective of the certifiability of job requirements provides an
effective angle to address the “how” question. Driven by the certifiability of job
requirements, individuals mobilize either formal, or informal, or both job search channels to
match their qualifications to the employer’s expectations. To what extent contact use is
effective depends on the extent to which the employer values uncertifiable qualifications.
The fact that the employer often considers both certifiable and uncertifiable qualifications for
a job position implies that informal channels should exert positive functions when used
jointly with formal channels, rather than being used alone. This study thus provides a new
approach to examine the causal effects of contact use on job search success, which I will
further explore in Chapter 4.
86
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Chapter 4 When Does Contact Use Matter? The Joint Use of Formal and Informal Channels and Job Search Success
4.1. Introduction
An ongoing debate, centered on the roles the use of social contacts plays in job search
success, has stimulated studies at two opposite sides. On one hand, following Granovetter’s
(1973, 1974) pioneering study on how information flows through weak ties during a job
search process, scholars further extended their investigations about the advantages of contact
use to job search outcomes. Positive effects of contact use are thus shown on successful job
attainment and subsequent outcomes, such as income and occupational prestige (Bian 1997;
Erickson 2001, 2004; Lin 1982; Lin and Dumin 1986; Lin, Vaughn, and Ensel 1981;
Marsden and Hurlbert 1988). On the other hand, those positive effects of contact use are
found to be inconsistent, particularly when other factors, such as gender, race, and education,
are taken into account (Bridges and Villemez 1986; Corcoran, Datcher, and Duncan 1980;
Holzer 1987; Korenman and Turner 1996; Marsden and Gorman 2001; Staiger 1990).
Faced with this dilemma, in Chapter 3 of this dissertation, I pointed out that the positive
effects of contact use may be contingent on the employer’s hiring expectations. From the
perspective of the certifiability of job requirements, I articulated that employers’ hiring
expectations vary from certifiable qualifications (such as diplomas, degrees, certificates, or
licenses) to uncertifiable qualifications (such as loyalty, work ethics, career ambition,
enthusiasm, and personality). While formal procedures are often used if certifiable
qualifications are the focus of the job, informal procedures tend to be more effective and
efficient when uncertifiable qualifications are the focus of the job. Because the majority of
job positions require both certifiable and uncertifiable qualifications, the employer often
combines formal and informal methods in a hiring process. Consequently, job seekers who
can mobilize both formal and informal channels to match the employer’s hiring strategies are
more likely to succeed in their job searches. For most jobs, successful candidates’ “certifiable
qualifications may not be at the top level, but are sufficient to meet the employer’s
requirements for the job position. Meanwhile, they are also able to demonstrate their
uncertifiable qualifications through informal channels.” (see Chapter 3: 90)
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If individuals who mobilize both formal and informal job search channels, rather than who
rely on either formal or informal channels only, are more likely to succeed in job search, a
naturally derived proposition from the use-of-joint-channel argument would be: the joint use
of formal and informal job search channels is more advantageous than the use of either
formal or informal channels alone.
Using data drawn from the 2003 China General Social Survey (CGSS hereafter), this current
chapter thus aims to empirically demonstrate the proposition about the advantages of using
formal and informal job search channels jointly. The context of the newly emerged labor
market of China provides an excellent setting for this study. As I articulated in Chapter 2,
state power and market strength have been co-strengthened during the gradual process in
which China’s employment system shifted from a state-controlled job assignment program to
a free labor market. Corresponding to this institutional change, individuals not only pursued
certifiable qualifications (such as education and political credentials), but also continuously
mobilized informal ties to demonstrate uncertifiable qualifications. Formal and informal job
search behaviors seem to be combined together naturally in the transitional context of China.
In the following parts of this chapter, I will first point out the necessity of examining the
effects of contact use in combination with formal job search methods. I will then hypothesize
advantages of the joint use of formal and informal channels in the context of China’s labor
market. I will categorize all observed job search methods into three channels, namely, the
joint channel, formal channel only, and informal channel only. The purpose of this chapter is
to demonstrate that the optimal job search outcome is achieved through the joint use of
formal and informal job search methods, instead of using either the formal or informal
channel alone. I will compare outcomes led by three types of job search channels both during
the job search process and after job attainment. Although my argument, to some extent, may
be due to the characteristics of the Chinese labor market, my study shows the necessity of
understanding the roles that contact use plays beyond a conventional formal-vs.-informal job
search dichotomy.
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4.2. Formal versus Informal Job Search: The Mismatch between Theoretical Dichotomization and Empirical Non-Separation
Granovetter’s (1973) seminal study on the “strength of weak ties” stimulated sociologists’
long-lasting interest in job-person matching, a topic that was traditionally studied only by
economists. Since then, numerous studies (Bian 1997; Bian and Ang 1997; Bridges and
Villemez 1986; De Graaf and Flap 1988; Fernandez, Castilla, and Moore 2000; Fernandez
and Weinberg 1997; Lin et al. 1981; Marsden and Hurlbert 1988; Marsden and Gorman
2001; Wegener 1991) have contributed in highlighting the significant roles social relations
play in economic activities, by contrasting informal job search methods with formal methods.
However, strong counterevidence on the positive effects of contact use on job search cannot
be denied, either (Bridges and Villemez 1986; Corcoran, Datcher, and Duncan 1980; Holzer
1987; Korenman and Turner 1996; Marsden and Gorman 2001; Mouw 2003; Staiger 1990).
By taking a close look at the existing literature, I found a within-group difference among
contact users. For example, De Graaf and Flap’s (1988) comparative study about West
Germany, the Netherlands, and the United States, and Volker and Flap’s (1999) follow-up
study on job search behaviors in the German Democratic Republic both found that formal
and informal job search methods do not show significant differences in influence on prestige
of obtained jobs. The use of high-status contacts has a significant effect on job prestige only
when the comparison is made among job seekers who all used informal methods. In other
words, a significant difference does not exist between job seekers who used and who did not
use contacts, but among those who all used contacts to some degree.
Indeed, most scholars who confirmed positive effects of contact use on job search outcomes
did not base their conclusions on a comparison between respondents who used informal job
search methods and their counterparts who used formal methods. A common strategy is to
distinguish the strengths of ties used in job search. Focusing on the respondents who found
jobs through family members, relatives, friends, acquaintances, and any other types of
informal relations, Lin and Dumin (1986) reported that getting help from a contact with
higher social status (normally accessed through weak relations) leads a job seeker to a better
job than getting help from strongly-tied contacts, such as family members and relatives. In
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his study on the German labor market, Wegerner (1991) considered the interaction effect of
social status and tie strength only within the group in which respondents all used informal
contacts. His finding— weak ties are more effective for lower-status individuals to “reach
up,” while people in the upper class would rely on strong ties to exclude themselves from the
rest of the society— did not concern the advantages of contact use relative to other formal
job search methods, either. Similarly, using data drawn from a survey in Tianjin, Bian (1997)
argued for a positive influence of using strong ties on obtained job prestige. It is noticeable
that instead of using the whole sample, Bian (1997) used 45% of the sample, in which
respondents all used some kind of contacts during job search. In short, instead of
demonstrating the advantages of contact use over formal job search methods, the existing
studies convincingly demonstrate that there is a within-group variation among contact users
in terms of the impact of contact use on job search outcomes.
The within-group differences among contact users may be understood from the essential
characteristic of social capital – homophily. The principle of homophily, also known as the
‘like-me’ hypothesis, means that social interactions tend to take place among individuals
with similar socioeconomic characteristics, implying a positive relationship between
individuals with similar socioeconomic statuses and the amount of interactions they have
(Lin 2001:40). Because of this, “it is not the use of contacts per se, but the quality and
quantity of the social resources that are accessed through using contacts that matters.”
(Mouw 2003: 869; see also Lin 1999: 481) If the quality of contact use is positively
associated with one’s own characteristics, it is reasonable to infer that contact use may be
effective only for those who possess desirable formal (or certifiable) qualifications, as Lin
(2001) stated in his social-resource theory. For this reason, it is not only possible, but also
necessary to consider the positive effects of contact use in combination with formal job
search methods, rather than from a formal-vs.-informal-search dichotomous approach.
4.3. Hypotheses: Advantages of Formal-Informal-Joint Job Search Channels
Due to the existence of a within-group difference among contact users, in this section I will
hypothesize that this difference is between individuals who use formal and informal job
search methods jointly and their counterparts who rely exclusively on informal channels.
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According to Lin’s (1999:31) summary, the use of social contacts exerts positive impacts on
one’s job search, in terms of: 1). facilitating the flow of information (Granovetter 1973,
1974; Lin and Dumin 1986; Marsden and Hurlbert 1988); 2). exerting influence on the
employer’s decision-making process (Bian 1997; Bian and Ang 1997; Volker and Flap
1999); 3). providing social credentials to an individual (Fernandez, Castilla, and Moore 2000;
Fernandez and Weinberg 1997); and 4). reinforcing the individual identifying and
recognizing him- or herself as a member of the work organization (Fernandez et al. 2000).
While the first two advantages occur during a job search process, the other two happen after
one gets a job.
By distinguishing individuals who use formal and informal channels jointly from those who
rely solely on informal methods, I argue that the existing notions about the advantages of
contact use can be altered by adding one condition; namely, the use of contacts in
combination with formal job search methods. In terms of the role of contact use in facilitating
information flow (Granovetter 1973, 1974), I thus hypothesize that:
Hypothesis 1: The joint use of formal and informal channels broadens one’s search
coverage. Namely, other characteristics being equal, individuals who jointly use formal and
informal job search methods are likely to access more job information, and thus apply for
more job positions than their counterparts who use only formal or informal methods during
job search.
In Chapter 2, I have pointed out that while urban Chinese citizens continuously sought state-
assigned job opportunities, they have unintentionally become market-oriented. Namely, a
rational job seeker would not limit him- or herself only to the job assignment system, but
instead, maximize his or her employment chance by looking for jobs broadly. My hypothesis
emphasizes that job seekers who use formal and informal methods jointly have a significant
advantage in accessing job information. The verification of this hypothesis will demonstrate
that Granovetter’s (1973, 1974) argument about the role of contact use as a conveyor of
information is valid not only in a developed market economy (such as the United States), but
also in a transitional economy (such as China).
Certainly, searching broadly does not necessarily mean an advantage, unless a broad search
enhances one’s search efficiency by matching a job with one’s reservation wage in a
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reasonable time period. This relates another advantage of contact use in terms of influencing
the employer’s decision-making process. If job seekers who use formal and informal search
channels jointly are more likely to influence the employer’s decision-making process
positively, I hypothesize that:
Hypothesis 2: The joint use of formal and informal channels shortens one’s search duration.
Namely, other characteristics being equal, individuals who use formal and informal channels
jointly are more likely to successfully exit job search in a reasonable time period than their
counterparts who use only formal or informal methods during job search.
Whether or not one finds a job within a certain time period has commonly been used as one
of the essential measures of job search success (Brasher and Chen 1999; Rosenfeld 1975).
“Typically, a somewhat arbitrary cut-off time for finding a job is chosen, such as one month
after being laid off another job (e.g. Kanfer and Hulin 1985) or whether students have found
a job by graduation.” (Brasher and Chen 1999: 58) Within the context of the dominance of
the state-controlled job assignment system in China till 2003, however, in this study I used a
three-month time span as the threshold, based on the average time length required for getting
a state-assigned job28. Namely, my hypothesis about job search duration is that: Other
characteristics being equal, individuals who use formal and informal channels jointly are
more likely to succeed in job search within a three-month time period than their counterparts
who use either formal or informal methods only.
As for the advantages of contact use after job attainment, although Lin (1999) did not include
income into his aforementioned summary about functions of contact use, existing studies
usually focus on income, since it is the most straightforward indicator of how well a job
seeker matches with a position. The majority of studies reviewed by Granovetter (1995),
Marsden and Gorman (2001), and Mouw (2003) do not show significant effects of contact
use on wages (Bridges and Villemez 1986; Campbell and Rosenfeld 1985; De Graf and Flap
1988; Elliot 1999; Marsden and Hurlbert 1988; Volker and Flap 1999). One possible
explanation is that entry-level wages used in those studies might not reflect economic returns
28 Getting an assigned job was usually slower than finding a job through the labor market. Normally, the bureaucratic procedure would take about three months (Chan, Ngok, and Phillips 2008).
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to the job search channel entirely, because not only the absolute amount but also the growth
rate of entry-level wages matters (Corcoran et al. 1980; Simon and Warner 1992). For this
reason, the most recent wage should be a better indicator than the entry-level wage to capture
individuals’ career success. If the joint use of formal and informal job search methods leads
to a better job-person match, I hypothesize that:
Hypothesis 3: Other characteristics being equal, the joint use of formal and informal job
search methods leads to a better economic return at the recent stage than the use of either
formal or informal job search methods alone.
This is because one’s job entry casts a time-lagged effect on late-stage career success, which
cannot be seen from entry-level income (Brown et al. 2006; Warren et al. 2002). This is
particularly true in the Chinese context. Drawing data from an urban household survey in
1999, Knight and Yueh (2004) found that while mobility among rural-urban migrants was
extraordinarily high, mobility among urban Chinese workers was negligible. At least before
2000, the majority of urban workers “had lifetime employment with their work unit so that
any improvements in the matching of workers and jobs occurred only within the work unit.”
(Knight and Yueh 2004:658) Job entry thus plays a determinant role in one’s career success.
However, as Zhou, Tuma, and Moen (1997) specifically pointed out in their study on job
shift patterns in urban China from 1949 to 1994, the entry-level income could not reflect
economic gains embedded in a job position, especially in the state sector. Only after latent
benefits in the state sector (such as housing and health care29) were marketized and counted
into one’s income from 1999 onwards, has income become comparable between the state and
private sectors. Thus, at least for the 2003 CGSS data that cover job entries from the 1940s to
2003, income in the year of 200230 provides more reliable information to compare career
success across sectors, relative to entry-level income collected across decades in the last
29 A significant reform of the housing policy is represented by the issue of “Regulations on the Management of the Housing Provident Fund” in 1999 (available via http://www.people.com.cn/GB/shizheng/19/20020328/697118.html). Since then, public housing has officially begun to be marketized and the Housing Provident Fund is included as part of state employees’ annual income. The significant step of marketizing health care took place early this century (see Song’s 2010 review).
30 Cases of job entries in 2003 were dropped from corresponding analyses due to the lack of income information.
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century. In addition, by using income in the most recent year available in the dataset, one can
avoid adjusting for differences caused by over-time inflation and policy changes.
4.4. Data, Measurements, and Methods
4.4.1. Generation of Three Job Search Channels
As aforementioned, to demonstrate the above hypotheses, I used data drawn from the 2003
CGSS. The dataset serves this study well, because it includes retrospective information about
respondents’ career paths up to the most recent year. Each respondent was asked to report all
methods he or she tried in order to get into the current workplace. The options “replacing
parents(s)/ relatives,” “recommendation from others,” and “others offered a job without
asking” were coded as informal channels, while the others were coded as formal channels,
including “assigned by the government or arranged by some official organization,” “internal
recruitment in a state-owned organization,” “direct application,” “employment services in the
market,” “human resources exchange centre,” “self-employed,” and “job entry
examination.”31 I need to point out that in order to draw a boundary between “informal” and
”formal” methods, in this study I do not further distinguish different formal methods. Thus,
both the state-controlled hiring system and regular methods used in the labor market are
categorized into the “formal job search” channel.
Based on all methods reported by each respondent, three job search channels were generated.
If all reported methods belong to the formal channel, this corresponding respondent would
fall into the “formal channels only” category. Likewise, the category of “informal channels
only” refers to respondents who only used informal job search methods. If the reported
options include both formal and informal job search methods, this corresponding respondent
would be coded as a “formal-informal-joint-channel” user. To verify the information, each
respondent was asked again in the later part of the questionnaire about how they collected job
information, and whether or not they received help from someone else in the process of
getting their current jobs. If a respondent did not report any informal job search method in
31
Formal channels include the state-controlled job assignment system and regular hiring procedures in the labor market. More detailed information about the differences between those two can be seen in Chapter Two about China’s employment system change from the 1970s to 2003.
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the earlier questions, but later reported using informal connections for collecting job
information and/or getting help from someone else for job acquirement, this case would be
recoded from “formal channels only” to “formal-informal joint channels.” As Table 9
presents, 21% of the respondents reported using formal and informal channels jointly in their
job searches, while 62% and 17% of the respondents reported using formal and informal
channels only, respectively. This distribution shows that while 62% of the respondents only
used some kind of formal job search channels, the other 38% more or less relied on informal
channels to get into their current workplaces. This distribution is in line with the fact that the
majority of urban Chinese citizens got jobs exclusively through the state-assignment system
before 2003, as demonstrated in Chapter Two about China’s employment system from the
end of the 1970s to early this century.
4.4.2. Dependent Variables and Other Independent Variables
The first dependent variable is the number of jobs one actively applied for before obtaining
an offer from the current workplace (0= did not apply for any job; 1=1 job; 2= 2 jobs; 3= 3
jobs; and 4= 4 jobs or more). Table 5 shows that 84.66% of the respondents did not apply for
jobs, but instead got assigned jobs. 6.26% of the sample applied for one job, 3.89% applied
for two jobs, 2.52% applied for three jobs, and 2.67% applied for four jobs or more. I must
emphasize that respondents applying for zero jobs might still have mobilized job search
strategies. As Bian (1997) pointed out in his study about job search behaviors within the job
assignment system, individuals did not just passively wait for assigned jobs; very often, they
mobilized all kind of informal ties in order to be assigned in good positions. In other words,
applying for zero jobs does not indicate the absence of a job search strategy. I also want to
point out that the generally non-intensive job search phenomenon needs to be understood
within the context of China’s employment system change from the 1970s to 2003, during
which the state-controlled job assignment never lost its popularity. Urban Chinese citizens’
persistent preference towards state-assigned jobs prevented them from actively searching for
jobs in the labor market in the last century. As I pointed out in Chapter 2, however,
individuals had to increase job search intensity due to the increasingly scarce assigned jobs.
In other words, an individual’s job search intensity is not entirely determined by his or her
own willingness, but, to a great extent, is determined by the historic stage in which a job-
person matching process occurs. It would be impossible before the 1980s and unlikely in the
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1980s for an individual to get a “good,” legal job outside the job assignment system. It
became necessary for an individual to actively search for jobs in the 1990s, and since then
job search intensity has continuously increased. Because of this, the zero-inflated negative
binominal regression was adopted to address the excessive zero issue of the sample
distribution. I will elaborate on this reason in the methods section.
The second dependent variable is job search duration (1= got a job within a three-month
duration; 0= did not get a job within a three-month duration). 43% of the respondents got into
their current workplaces within three months, while 57% failed to do so. The last dependent
variable is logged annual income in the year of 2002. After a logarithmic transformation, the
distribution of logged annual income in 2002 is approximately normal with a mean value of
7.73 and standard deviation of 3.19.
In addition to the three types of job search channels, other independent variables are coded as
follows. Education was coded by years. In addition to education, for Chinese job seekers, an
additional source of formal resources lies in membership in the Communist Party. Joining the
Party was once the symbol of one’s merits in the communist era; and still connotes desirable
qualities in a job seeker in the post-communist era, such as organizational and
communication skills, team spirit, and the capability to get things done (Guo 2005). Finally,
family status origin was measured by the father’s highest education and party membership32.
Control variables include: age (coded by years) and its squared form, gender (1= female;
0=male), and era of job entry (1= entered the current workplace before 1979; 2= entered the
current workplace between 1979 and 1992; and 3= entered the current workplace after
199233). In addition, for models about the job search process, I controlled over one’s work
32 Father’s socioeconomic status is supposedly the ideal measure of one’s family background in a patriarchal society. However, information about the father’s occupational characteristics is ambiguous in the original questionnaire. The only available information about the type of the father’s workplace (state sector vs. private sector) cannot be used, unfortunately, due to a large portion of missing values. Information about the father’s education and party membership is much more reliable. Moreover, these two variables are directly associated with one’s socioeconomic status under the pre-reform communist regime. It is thus justifiable to use the father’s education and party membership characteristics as measures of one’s family background. 33 The rationale of this categorization is in line with three stages of the socioeconomic transformation in China. Usually, the year of 1979 is considered the beginning of the reform, while the year of 1992 indicates that the reform reached a new stage, where the socialist system had begun a fundamental change. More details can be seen in Chapter 2 of this dissertation.
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experience prior to entering the current workplace (coded by years) and its squared form. For
models on the recent income attainment, I instead controlled over the type34 of one’s
workplace (0= state-owned enterprises (SOEs hereafter); 1= governmental, public, and party
organizations; 2= collective organizations; 3= private firms; and 4= others), one’s current
position (1= managerial position; 0= worker position), and one’s total years of work
experience up to 2002 and its squared form. Descriptive analyses of the above variables are
presented in Table 9.
Other independent variables include education (coded by years), party membership (1= party
members; 0=non-party members), family background (measured by the father’s highest
education and party membership), era of job entry (1= entered the current workplace before
1979; 2= entered the current workplace between 1979 and 1992; and 3= entered the current
workplace after 199235), female (1= female; 0=male), age (coded by years) and the square of
age. In addition, for models about the job search process, I controlled over one’s work
experience prior to entering the current workplace (coded by years) and its squared form. For
models on income, I instead controlled over the type of one’s workplace (0= state-owned
enterprises (SOEs); 1= governmental, public, and party organizations; 2= collective
organizations; 3= private firms; and 4= others), one’s current position (1= managerial
position; 0= worker position), and one’s total work experience up to 2002 (coded by years)
and its squared form. Descriptive analyses of the above variables are presented in Table 5.
34 Due to the co-existence of state power and the market economy, there have been distinctively different types of workplaces in the Chinese labor market. State-owned enterprises include those work organizations in manufacturing, processing and other production firms, and those in service sectors that are directly owned by the central or various levels of local governments. The category of governmental, public and party organizations includes not only ministries, commissions, bureaus and offices at various levels of the Communist Party and central and local governments, but also nonprofit organizations in the public domain. Collective enterprises are often sponsored by local governments (such as district/county government or residential offices). Despite its public ownership, this type of organization has the least redistributive benefits, so is also less regulated by the government than state-owned enterprises. The type of private firms includes private entrepreneurs, firms with mixed property rights, and foreign investment firms. 35 The rationale of this categorization is in line with three stages of the socioeconomic transformation in China. Usually, the year of 1979 is considered the beginning of the reform, while the year of 1992 indicates that the reform reached a new stage, where the socialist system had begun a fundamental change. More details can be seen in my paper (2012b) on China’s employment system change up to 2003.
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Table 9. Descriptive Statistics of Dependent and Independent Variables Used in Chapter 4, CGSS 2003, Urban Section
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4.4.3. Methods
Zero-inflated Negative Binomial Regression was adopted to estimate the likelihood of the
number of positions one applied for prior to job entry. As aforementioned, an excessive zero
– almost 85% of the respondents did not apply for any job – is not because available jobs
outnumber applicants so that job search is not necessary; instead, this is mainly due to the
institutional constraint within the job assignment system. Namely, non-search behavior is
inflated by the historic stages of the job assignment system. In Table 6, I thus used the
variable “era of job entry” to indicate the institutional constraint that inflates the proportion
of applying for zero jobs. Following the convention in previous studies, Binary Logistic
Regression was used to estimate one’s likelihood of getting a job within a three-month time
period. Ordinary Least Squares (OLS) and Endogenous Switching Regression (ESR) models
were used to estimate one’s long-term career success, indicated by the most recent income. In
the following part of this section, I will explain the use of the ESR model in detail.
As aforementioned, based on the homophily characteristic of social capital, I inferred that
contact use exerts positive effects in combination with formal job search methods, instead of
being used alone. However, this by no means implies that an individual with an advantageous
status, equipped with both formal and informal resources, must use formal and informal
channels jointly for job search. An individual’s decision on which job search channel to use
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is based on what career path he or she desires and how intensively he or she searches for
jobs. It is entirely possible that one who is able to use the joint channel actively chooses to
use a type of single channel, if one perceives using a type of single channel as a less costly
way for achieving one’s desired career path. When an individual who is capable of using the
joint channel chooses to use a type of single channel, the returns to his or her job search
behavior are expected to be different from the average returns to this kind of job search
behavior, because he or she possesses qualities essentially different from the typical qualities
attached to this kind of job search behavior. In this case, one’s job search outcomes are not
equivalent to the effects of the job search channel, but reflect the interaction between one’s
qualities and this job search channel. When this interaction occurs, the estimation of the
effect of the job search channel based on the observed job search outcome would be
confounded by the effect of the individual’s qualities. In other words, one’s selection on the
use of the job search channel, namely, the selection effect, could bias the estimation of the
effect of the job search channel, based on the observed job search outcome.
Therefore, I must emphasize the distinction between effects caused by job search channels
per se from those caused by individuals who used different types of job search channels. In
an ideal36 situation, three types of job search channels are used by three distinctive groups of
job seekers, respectively; and each of the group of job seekers uses only one type of job
search channel. Each ideal type of the job search channel is not equivalent to the
corresponding group observed in the empirical data, since the “ideal” type is predicted across
the population without the disturbance of a self-selection effect. For example, ideal joint-
channel users are not equivalent to respondents who reported using joint channels in the
dataset; instead, they refer to part of the population with typical characteristics of joint-
channel users. This group may not be observed in the data, because it is a predicted outcome
at the population level under the assumption of random selection. The same interpretation is
also applied to the ideal formal-channel-only users and ideal informal-channel-only users.
The observed differences in job search outcomes reflect the disparities among different types
of job search channels, only when three observed groups of job seekers are equivalent to
36 The explanation about “ideal” can be seen in Chapter 3.
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three ideal groups, respectively. However, this is not always the case. The fact that ideal
joint-channel users share characteristics with both ideal contact users and formal-channel
users implies that their job search choices are full of self selection. In other words, while
some individuals who possess both formal and informal resources indeed use the joint
channel, it is completely possible for some others with both types of resources to use either
the formal channel or the informal channel only, since they are able to do so. When
individuals who are ideal joint-channel users actively choose to use a type of single job
search channel, the observed search outcome would not be caused only by the effect of the
job search channel, but by a co-determination of job seekers’ characteristics and the chosen
type of job search channel.
To reveal the effect caused by a type of job search channel itself, thus, it is necessary to
decouple the difference caused by the use of the type of job search channel from that caused
by job seekers’ characteristics. The ESR model thus provides a powerful solution in this
regard. According to Gamoran and Mare (1989), Gerber (2000), and Mare and Winship
(1988), the rationale of the ESR model is to estimate the pure effect of a dichotomous
variable – often called treatment variable – by controlling over the difference due to
individuals’ active selection. In this study, the treatment variable is whether or not a job
seeker uses the joint job search channel, if one considers “using the joint channel” one
outcome and “not using the joint channel” the other. “Not using the joint channel” means the
use of either of the two types of the single channel – the formal channel only or the informal
channel only. Presumably, the “formal channel only” and the “informal channel only” are
two ends of the spectrum of individual job search behaviors, meaning that individuals who
only use the formal channel possess characteristics complementary to those of individuals
who only use the informal channel. For this reason, the ideal formal-channel-only users
would not have a possibility to fall into the category of the “informal channel only,” because
they do not possess any characteristic of being ideal “informal-channel-only” users. Vice
versa, the ideal informal-channel-only users would not have a possibility to fall into the
category of the “formal channel only,” either. Therefore, it is theoretically incorrect to
assume that an individual’s selection could vary between the “formal channel only” and the
“informal channel only” options. In addition, because two possibilities – the “formal channel
only” and the “informal channel only” – cannot occur simultaneously, the choices facing
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ideal joint-channel users consist of two sets of options; namely, using the joint channel
relative to using the formal channel only, or using the joint channel relative to using the
informal channel only. Therefore, it is also theoretically incorrect to assume that an ideal
joint-channel user would be faced with three options simultaneously.
Based on the above theoretical concerns, I modeled the ideal joint-channel users’ potential
choices between the joint channel and the “formal channel only,” and between the joint
channel and the “informal channel only,” separately. I also excluded the possibility of the
interchange between the “formal channel only” and the “informal channel only.” To estimate
the ideal joint-channel users’ selection between the joint channel and either type of the single
channels, the ESR model consists of three equations – two outcome equations and one
selection equation. Assuming the sampled respondents were selected from two separate
populations – ideal joint-channel users (population 1) and ideal formal (or informal)-channel
users (population 2), job-attainment outcome, i.e., income, can be estimated using the
following outcome equations:
��� = ∑ ������� + �� (1)
��� = ∑ ������� + �� (2)
For each individual i, the estimated income (��) is composed of the intercept (���), all effects
of this individual’s measurable characteristics (��� �� + ��� ���+ ⋯ + ��� ��), and the error
term (�). In different populations, the same measurable characteristic � exerts its impact
differently; namely, ��� differs from ���. Within each population, with each measurable
characteristic is fixed to its average value �, the average effect of each type of job search
channel on the outcome variable is:
�� = ∑ ������ + � (3)
�� = ∑ ������ + � (4)
By calculating �� − ��, one can thus see the real difference caused by using different types of
job search channels, under the assumption that equation (3) only captures individuals in
population 1 while equation (4) only captures individuals in population 2. This is the
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assumption when OLS regression is used to predict the effects of job search channels.
However, this assumption does not always hold, because the boundary between joint-channel
users and single-channel users is not necessarily clear. For individuals who possess both
formal and informal resources, they could choose either to use or not to use the joint channel.
One can assume that there is a latent score, z, which reflects both the effects of measurable
factors and an individual’s calculation about potential economic return to each type of job
search channel.
�� = ∑ �� �� + ����� + ����� + ��� (5)
For an ideal joint-channel user �, if �� > 0, then this individual would use the joint channel
(�� = 1); if �� < 0, then he or she would choose to one type of single channel (�� = 2). By
plugging in equations (1) and (2), one can simplify equation (5) as:
�� = ∑ �� �� + �� (6)
where �� = ��"+ ����#
+ $� and %= ���%
+ ���%+ ��.
Based on the above selection equation, if an individual who possesses both formal and
informal resources perceives achieving the optimal job search outcome in using one type of
single channel, he or she would be more likely to choose a type of single channel over the
joint channel. In this case, this individual would be observed in the group of single-channel
users, though he or she possesses typical characteristics of joint-channel users; namely, a
self-selection effect occurs. With the existence of self selection, the effects of types of job
search channels cannot be simply calculated in equations (3) and (4), because ��� can only
be used for individuals who possess typical characteristics in population 1, while ��� can
only be used for those who possess typical characteristics in population 2. Using the
mathematic language, a self-selection effect means that the error term ( ) in the selection
equation (equation 6) is endogenous to the error terms (�and�) in the outcome equations;
namely, &'()�, + = ,� ≠ 0, and/or &'()�, + = ,� ≠ 0.
A more straightforward understanding of ,� and ,� is based on estimations on the outcome
variable. For example, in an ESR model using a treatment variable with two options – the
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joint channel and the formal channel only, one can consider the ESR model estimating the
outcome variable – income – twice for each of the two options. One estimation is based on
the observed data, while the other is based on a predicted population consisting of ideal joint-
channel users who only use the joint channel and ideal formal-channel users who only use
the formal channel. A significant self-selection effect occurs when two estimations are
significantly different. In an ESR model, Ρ37 is used to denote: 1) whether or not there is a
significant self-selection effect in each group; 2) the degree and direction of the self selection
at the population level, if it does exist. The “+” sign indicates a positive selection effect in ρ1,
while it indicates a negative selection effect in ρ2. In the example of the ideal joint-channel
users in population 1 and the ideal formal-channel-only users in population 2, a significantly
positive ρ1 means that part of the observed advantage of using the joint channel is caused by
individual characteristics, so the effect of the joint channel is overestimated. A significantly
positive ρ2 would then mean that the observed advantage of using the joint channel shows
only a part of the effect resulting from the ideal joint channel, so the effect of the ideal joint
channel is underestimated. On the contrary, the “-” sign indicates a negative selection effect
in ρ1, while it indicates a positive selection effect in ρ2. Still, in the example of the ideal joint-
channel users in population 1, and the ideal formal-channel-only users in population 2, a
significantly negative ρ1 means that the observed advantage of using the joint channel is only
a part of the advantage caused by the ideal joint channel, so the effect of the ideal joint
channel is underestimated. A significantly negative ρ2 means that part of the observed
advantage of using the joint channel is caused by individual characteristics, so the effect of
the joint channel is overestimated. More explanations about ρ1 and ρ2 can be seen in
Gamoran and Mare’s (1989) study on the track effects on college students’ school
performance.
4.5. Advantages of the Use of the Joint Channel during Job Search
I started my analysis with the advantages of the joint channel during job search. As indicated
by the number of positions one applied for, the amount of job information conveyed by
37 To make the interpretation convenient, the correlations between σ13 and σ1, and between σ23 and σ2, rather than σ13 and σ23 themselves, are reported. namely, ρ1=σ13/σ1, and ρ2=σ23/σ2.
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different types of job search channels is estimated in Table 10. Other characteristics being
equal, individuals who only used the formal channel on average applied for jobs 65% (=(1-e-
1.055)*100%) less than their counterparts who used formal and informal channels jointly. The
coefficient of the ‘informal only channel’ is negative, suggesting the trend of one applying
for less jobs in this channel relative to the joint channel, though this trend is not statistically
significant. Also, noticeably, one’s education and the father’s education exert positive
impacts on the number of jobs one applied for, whereas one’s party membership and the
father’s party membership play negative roles in the number of jobs one applied for, with
other covariates controlled. I want to emphasize that era of job entry indeed causes an
inflated zero. As the ‘inflate’ column shows, compared to the pre-reform stage, the first stage
of the reform decreases the probability of an inflated zero by 38% (=(1-e-0.48)*100%), while
the second stage of the reform decreases the probability of an inflated zero by 81% (=(1-e-
1.64)*100%). Namely, as the substitution of the labor market for the job assignment system
proceeded, applying for zero jobs is increasingly less likely because one did not need to
search for jobs. With the issue of an excessive zero taken into account, among three types of
channels, the use of the formal channel leads to significantly less job information than that of
either the joint channel or informal channel. This is because the majority of respondents who
used formal search methods only in the 2003 CGSS are those who solely relied on the state’s
assignment. They usually got only one assigned option at one time. Under the “mutual
selection” principle, theoretically, one could have got a second assignment if the first
assigned job did not match one’s expectations. As the number of assigned positions kept
decreasing, however, one might accept whichever job was assigned to him or her, because a
second round of assignment would be unlikely.
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Table 10. Zero-Inflated Negative Binomial Regression of the Number of Positions One Applied for Prior to Job Entry
Coef. Inflate Job search channels (ref: Joint channel) Formal channel only -1.055 ***
(0.097) Informal channel only -0.030
(0.081) Age 0.034
(0.035) Age square -0.001
(0.001) Female -0.075
(0.064) Education (in years) 0.057 ***
(0.013) Party membership -0.299 *
(0.129) Father's highest education 0.028 ***
(0.009) Father’s party membership -0.131 +
(0.072) Previous work experience 0.000
(0.015) Previous work experience square 0.000
(0.001) Job entry era (ref: before 1979) The first reforming stage (between 1979 and 1992) -0.480 **
(0.153) The second reforming stage (after 1992) -1.644 ***
(0.147) Constant -0.439 1.910 ***
(0.468) (0.152) Observations 4,847 lnalpha -2.154 ** N_zero 4106 vuong 6.345 *** Chi2 test of alpha=0 2.91 * Log likelihood -2860.455
Note: Standard errors in parentheses *** p<0.001, ** p<0.01, * p<0.05, + p<0.1
I then turned to the effects of three types of job search channels on job search duration. Using
a three-month time span as the threshold, Table 11 shows that the use of the joint channel is
more likely to help one successfully exit job search within three months. Other characteristics
being equal, the chance for an individual who used the “formal channel only” to successfully
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get a job within three months is equal to 20% (=e-1.609) of the likelihood of one who used the
joint channel. If one only used the informal channel, his or her chance of getting a job within
three months is 47% (=e-0.76) of that of an individual who used the joint channel. Namely,
individuals who used the joint channel are most likely to successfully exit job search within
three months, followed by those who used the informal channel only, and then by those who
used the formal channel only38.
Above all, I examined two aspects of a job search process. In terms of the number of
positions one applied for prior to job entry, individuals using the formal channel only applied
for significantly less positions than their counterparts using either the joint channel or the
informal channel only, because most of the formal-channel-only user relied on the job
assignment system and did not actively apply for jobs. In terms of the search duration,
significant differences exist between the three types of channels. Individuals who used the
formal channel only are least likely to exit job search successfully within three months, while
those who used the joint channel are most likely to do so. Putting results from Tables 10 and
11 together, the use of the joint channel has an advantage over the use of the formal channel
in term of job information, and an advantage over both the use of the formal channel and the
informal channel regarding job search duration. Thus, during a job search process, the joint
use of formal and informal search channel is the most efficient among three types of job
search channels, since it leads to both more job information and shorter search duration.
38 The difference between “formal channels only” and “informal channels only” is also significant (coef.= -0.712; p=0.000).
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4.6. Advantages of the Use of the Joint Channel on Recent Income
4.6.1. OLS Estimations and Implications
I first estimated one’s economic gains in the year of 2002 using the OLS method. The results
presented in Table 8 do not show a significantly positive effect of the use of the joint channel
on income. First, the Baseline model shows that individuals who got jobs only through the
informal channel indeed earn significantly less than their counterparts who got jobs through
Table 11.
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the formal-informal-joint channel, other characteristics being equal. However, there is no
significant difference detected in income between individuals who used the formal channel
only and those who used the joint channel, shown as the non-significant coefficient for the
group of the “formal channel only” (relative to the reference group of the “joint channel”).
Second, in the Interaction model, I controlled over the interaction between type of job search
channel and type of workplace. This is because, as aforementioned, the job-assignment
system pervasive in the state sector in the last century is completely different from job search
methods usually used in the free labor market. Which type of workplace one desires to enter
may thus influence which type of job search channel one decides to use. The Interaction
model shows that after the interaction effects were controlled, the type of job search channel
does not show any significant effect by itself. However, the significant interaction terms
show that other covariates being equal: 1) The logged income of individuals who entered
governmental, public, and party organizations only through the informal channel is 0.833
units lower than that of individuals who entered state-owned enterprises through the joint
channel, and 0.167 (=0.666-0.833) units lower than that of their counterparts who entered
governmental, public, and party organizations through the joint channel. Also, 2) individuals
who entered private firms only through the informal channel earn significantly less (coef.= -
0.826) than those who used the joint channel to enter either state-owned enterprises or private
firms.
The OLS results in Table 12 do not show robust evidence of significant effects of different
types of job search channels on recent income. However, the Interaction model shows that
the economic return to a type of job search channel varies with the type of workplace. Thus,
if an individual desires to enter a certain type of workplace, he or she may use the type of job
search channel that can lead to the best economic return in the corresponding type of
workplace, though this person’s characteristics may match another type of job-search-
channel user well. This Interaction model thus suggests the possibility of the existence of job
seekers’ self selection.
By using the term ‘self selection’, I refer to the phenomenon in which an individual’s
behavior is not in line with the statistical estimation based on a randomized sample with
characteristics identical to this individual’s. This concept is particularly useful in job search
studies, because one’s job search strategies are not only predicted by one’s measurable
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characteristics, but are also determined by less obvious factors, such as one’s career
ambition, or perception of his or her ideal job. For example, an individual who could have
used both the formal and informal search methods to obtain a high-pay job in the market may
choose to solely pursue a state assigned job, due to the social values in favor of the job
assignment system over the labor market. It is also possible for this individual to choose to
solely rely on the informal channel, if he or she desires a “relaxing” rather than high-pay job,
and thus perceives that relying on the informal channel is an easy way out.
I must point out that, by exploring the interaction between type of job search channel and
type of workplace, I by no means imply that the type of workplace is the only possible reason
for self selection to occur, though job seekers’ preferences towards certain types of
workplaces indeed shape their search behaviors to a great extent, shown in Chapter Two of
this dissertation. In this analysis, however, my purpose is not to exhaust the reasons of the
occurrence of self selection, but to reveal the real effect of the job search channel without the
disturbance of a self-selection effect.
As aforementioned, using the ESR model, I mainly tested if there is a significant tendency
for ideal joint-channel users to actively select using either the formal channel only or the
informal channel only, since ideal joint-channel users presumably have the capacity to use
either of the two types of single channels. I excluded the possibility about the interchange
between two types of single job search channels. This is because the ideal formal-channel-
only users do not possess characteristics that enable them to use the informal channel only;
and vice versa, the ideal informal-channel-only users do not possess characteristics that
enable them to use the formal channel only.
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Table 12. OLS Regression of Logged Annual Income in 2002, Urban China
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4.6.2. The Joint Channel versus the Formal Channel Only
I first tested the potential interchange between the joint channel and the formal channel only.
According to the ESR formulas presented in the “Methods” section, one’s selection on the
type of job search channel is co-influenced by one’s measurable characteristics and
perception of the optimal job search outcome. An individual who possesses qualities of using
the joint channel may not necessarily use the joint channel, if he or she does not desire the
search outcomes obtained by using the joint channel. A selection effect would occur, when
individuals with the characteristics of the joint-channel users actively choose not to use the
joint channel. To detect this selection effect, I constructed the ESR model as follows. First,
assuming that one’s obtained job-related characteristics reflect one’s desired career path, I
used all job-related characteristics as both the factors of one’s recent income attainment and
proxies of one’s perception of the optimal job search outcome. Namely, job-related
characteristics were included not only in outcome equations, but also in the selection
equation. Second, family status origin has a direct impact on one’s choice of the type of job
search channel, but has only an indirect impact on one’s recent income attainment, as
demonstrated by Blau and Duncan’s (1967) study on the American occupational structure.
Thus, family background was only included in the selection equation, but not in the outcome
equations. Finally, one’s measureable characteristics influence both the choice of the type of
job search channel and recent income, and thus were included in both the selection equation
and two outcome equations.
With the above variables taken into account, Table 13 estimates if the income difference
between observed joint-channel users and formal-channel-only users is only caused by the
use of different types of job search channels. In Table 9, a significantly negative ρ1 indicates
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a negative self selection effect existing in the population of ideal joint-channel users,
meaning that there is a significant tendency for individuals with typical characteristics of
joint-channel users to purposely choose to use the formal channel only during job search. On
the other hand, a non-significant ρ2 suggests that individuals with typical characteristics of
formal-channel-only users did indeed choose to only use the formal channel for job search.
This confirms my aforementioned inference; that is, the ideal formal-channel-only users do
not possess characteristics for them to switch into another type of job search channel.
Because of the existence of a significant self-selection effect among ideal joint-channel users,
the observed income difference between two categories of the treatment variable is not equal
to the difference between the effect of using the joint channel and that of using the formal
channel only. The significant self-selection effect occurring among ideal joint-channel users
must be singled out, so as to reveal the real difference caused by the use of different types of
job search channels per se. To do so, I followed the decomposition method used by Gamoran
and Mare (1989) and Gerber (2000). The key formulas are presented in the Appendix D, and
more details about decomposition of group differences in ESR estimations are explained in
details by Gamoran and Mare (1989: 1178-80).
Table 14 presents the decomposition of the expected logged income based on estimations in
Table 9. As Panel A – “difference caused by the type of job search channel” shows, the
predicted income is significantly higher in the joint-channel group, relative to that of using
the formal channel only (13.01 vs. 8.29), when the self-selection effect is excluded. This is
the income gap caused by the use of different types of job search channels. It supports my
argument that the use of the joint channel leads to higher income return than the use of the
formal channel only.
Panel B shows “selection effects.” Predictions based on non-significant σ23 were italicized to
indicate non-significant selection effects. Predictions based on significant σ13 show that the
average logged recent income among observed joint-channel users is 5.04 units lower than
what is expected in the population of ideal joint-channel users, when individuals who possess
typical characteristics of joint-channel users had all used the joint channel (5.04= 13.01-
7.97). This means that there is a significant tendency for job seekers who possess typical
characteristics of joint-channel users to actively select themselves out of the group of the
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joint channel, and instead choose to use the formal channel only. Thus, when the observed
group of formal-channel-only users was hypothetically switched into the opposite position –
using the joint channel, the estimated average logged income is 6.4 units higher than what is
expected for ideal formal-channel-only users in a hypothetical scenario of using the joint
channel (6.4=14.69-8.29).
Panel C shows the “total expected logged income.” The income difference between observed
joint-channel users and formal-channel-only users is 7.97 vs. 8.41, though the latter was
predicted based on non-significant σ23. This explains the OLS results in Table 12, where the
coefficients of “formal channel only” (versus the “joint channel”) are positive but non-
significant in both the Baseline and Interaction models.
In short, under the random-assignment condition, in which the predicted outcome difference
between joint-channel users and formal-channel-only users can be completely attributed to
the difference between the use of the joint channel and the formal channel only, the use of the
joint channel itself indeed leads to significantly higher income than that of the formal channel
only, as shown in Panel A of Table 14. In reality, however, there is a significant trend, which
is that individuals who possess characteristics of typical joint-channel users actively chose to
use the formal channel only to find jobs. As a result, the estimation based on the empirical
data is significantly different from the estimation based on the same data under the
randomization condition. Because of the significant selection effect in favor of only using the
formal channel among individuals with typical characteristics of joint-channel users, the
predicted income, based on the empirical data, is significantly lower in the joint-channel
group while significantly higher in the formal-channel-only group, compared to the predicted
income in the corresponding group, based on the same data under the randomization
condition. The advantage of using the joint channel in income attainment is thus shown only
after the significant self-selection effect among individuals with typical characteristics of
joint-channel users is taken into account.
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Table 13. Endogenous Switching Regression of Logged Annual Income in 2002 between the Joint Channel and the Formal Channel Only
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Table 14. Decomposition of Expected Logged Income between the Use of the Joint Channel and the Formal Channel Only, Predicted Based on Table 13
4.6.3. The Joint Channel versus the Informal Channel Only
I subsequently examined if there is also a possibility to switch between the use of the joint
channel and the informal channel only. Unlike the previous model, where I used the “formal
channel only” as the baseline group, in this model I used the group of the “joint channel” as
the baseline group, as shown in Table 15, to exclude the possibility that the significant
existence of the self-selection effect is caused by the positions of two types of job search
channels in model estimation. Using the “joint channel” as the baseline group, Table 15
shows that ρ2 is significantly positive, which again indicates the existence of a negative self-
selection in the population of ideal joint-channel users. Namely, there is indeed a significant
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tendency for ideal joint-channel users to actively select themselves out of the joint channel,
and instead choose to use the informal channel only.
Table 16 presents the decomposition of the expected logged income based on estimations in
Table 15. Panel A – “difference caused by the type of job search channel” clearly shows that
the use of the joint channel leads to significantly higher income than that of the “informal
channel only” (10.35 vs. 7.49). In Panel B – “selection effects,” predictions based on non-
significant σ13 were italicized to indicate non-significant select effects. Predictions based on
significant σ23 show that the observed average logged income among joint-channel users
(with the occurrence of self selection) is 2.47 units lower than what is expected in the
population of ideal joint-channel users, when individuals who possess typical characteristics
of joint-channel users had all used the joint channel (2.47= 10.35-7.88). This means that there
is a significant tendency for ideal joint-channel users to actively choose to use the informal
channel only. Thus, when the observed group of informal-channel-only users was
hypothetically switched into the opposite position – using the joint channel, the estimated
average logged income is 5.38 units higher than what is expected for ideal informal-channel-
only users in a hypothetical scenario of using the joint channel (5.38=12.87-7.49). In Panel C
– “total expected logged income,” the observed difference in income attainment between
informal-channel-only users and joint-channel users is 7.38 vs. 7.88, though the former was
predicted based on non-significant σ13. This explains the OLS results in Table 12, where the
coefficients of the “informal channel only” (versus “joint channel”) are negative in both the
Baseline and Interaction models.
Again, under the random-assignment condition, in which the predicted outcome difference
between joint-channel users and informal-channel-only users can be completely attributed to
the difference between the use of the joint channel and the informal channel only, the use of
the joint channel itself indeed leads to significantly higher income, as shown in Panel A of
Table 15. However, a significant selection effect means that individuals who possess
characteristics of typical joint-channel users actively chose to use the informal channel only
to find jobs. Because of this, the predicted income, based on the empirical data, is
significantly lower in the joint-channel group while significantly higher in the formal-
channel-only group, compared to the predicted income in the corresponding group based on
the same data under the randomization condition. By controlling the significant self-selection
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effect among individuals with typical characteristics of joint-channel users, the use of the
joint channel is indeed more advantageous regarding recent income attainment, compared to
the use of the informal channel only.
By putting together results from Tables 9 to 12, Hypothesis 3 – the use of the joint channel
leads to higher recent income than the use of either the “formal channel only” or “informal
channel only” – is supported. The reason that the advantage of using the joint channel cannot
be observed in OLS models (as shown in Table 12) is because individuals who are typical
joint-channel users have a tendency to actively choose to use either the formal or informal
channel only. This causes an underestimation of the effect of the use of the joint channel.
With the self-selection effect excluded – meaning that individuals possessing typical
characteristics of joint-channel users indeed use the joint channel to get jobs, the use of the
joint channel displays a significantly higher income return than that of either the formal or
informal channel only.
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Table 15. Endogenous Switching Regression of Logged Annual Income in 2002 between Joint-Channel Users and Informal-Channel-Only Users
122
Table 16. Decomposition of Expected Logged Income between the Use of the Joint Channel and the Informal Channel Only, Predicted Based on Table 15
4.7. Conclusion and Discussion
In Chapter 3, I have demonstrated that a combination of formal and informal methods is
adopted most frequently in a job-person matching process, from both the employer’s and the
job seeker’s perspective. An argument naturally derived from this framework of the
“combined use of formal and informal job-person matching methods” is that the combined
use of formal and informal methods is more advantageous than the use of either the formal or
informal methods alone.
This current chapter thus aims to demonstrate the advantages of the joint use of formal and
informal methods from the job seeker’s side. My analyses based on the 2003 CGSS data
show that individuals who used formal and informal search methods jointly indeed tend to
obtain more job information and apply for more jobs than their counterparts who only used
the formal channel. The joint channel users are also more likely to exit job search
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successfully within three months, compared to both formal-channel-only and informal-
channel-only users. Overall, thus, the joint channel is the most advantageous among three
types of job search channels during a job search process, since it allows job seekers to access
more job information and at the same time exit job search successfully within a reasonable
duration.
I also examined the effect of the joint channel on one’s late-state career success, indicated by
the most recent income. The OLS results failed to reveal the economic advantages of the use
of the joint channel over the other two types of single channels. However, after controlling
over significant self-selection effects among individuals with typical characteristics of joint-
channel users, the ESR models show that the use of the joint channel indeed leads to
significantly higher income than the use of either the formal or informal channel only. This
advantage is underestimated in OLS models, because individuals with typical joint-channel-
user characteristics tend to actively choose to use either of the two types of single channels.
This seemingly ironic phenomenon may be understood from two aspects. First, one needs to
keep in mind that the focus in this study is long-term, rather than short-term, career success.
Mobilizing both formal and informal resources to search jobs in the joint channel is more
costly than using a single type of channel, for which only one type of resources is mobilized.
One would be motivated to use the joint channel only when its use generates greater returns
than the use of a type of single channel does. However, at the entry level, tangible returns
tend to be similar across different types of job search channels (as shown in existing studies
about the non-significant effect of contact use on entry-level wages), which may mislead an
individual to choose a relatively less costly type of job search channel if one fails to foresee
the long-term benefits of using the joint channel. Second, the co-development of state power
and a market economy in China’s transitional context may also shape individuals’ job search
behaviors. Particularly, driven by their persistent preference towards state-assigned jobs,
individuals may choose to get an assigned job through the formal channel only, instead of
mobilizing multiple job search methods to seek a job with the highest pay in the market.
Consequently, the observed income cannot be solely predicted by which job search channel
was used, because to what extent the use of a certain job search channel pays off depends on
who uses it. With the significant self-selection effect excluded, decomposition results based
124
on the ESR estimations show that the expected average income resulting from the joint
channel itself is significantly higher than that in either the formal or informal channel alone.
Overall, thus, considering both the job search process and long-term career development, the
use of the formal-and-informal joint channel – instead of either the formal or informal
channel only – pays off. This study provides a theoretical alternative corresponding to the
currently unsolved debate on the causal effects of contact use on one’s job search. While the
use of social contacts is demonstrated to play positive roles in facilitating one’s job search
success, critiques questioned the causal chain between contact use and job search outcomes
based on the homophily characteristic of social capital. My study shows that because of the
homophily principle, the positive effects of contact use should be seen in combination with
formal job search methods, rather than when social contacts are used alone. My analysis,
focused on the measures during a job search process as well as after job attainment, clearly
shows that the use of the informal channel alone does not benefit one’s job search. Instead,
one achieves the optimal job-search outcomes when contact use is jointly used with formal
job search methods. It may be safe to say that social capital exerts positive effects, not
despite its homophily characteristic, but exactly because of the homophily principle. My
argument of the joint use of the formal and informal job search methods thus provides a new
perspective to further explore the causal effects of social capital in future studies.
A caveat that one needs to bear in mind is that effects of different types of job search
channels may vary with institutional contexts, as Granovetter (1995) pointed out. The
Chinese labor market has long been characterized as a labor-oversupply market. Particularly,
the oversupply of highly-educated job seekers might have raised the formal-qualification
entry bar for the majority of job positions, which I have discussed in details in Chapter 2.
Although the phenomenon of the joint use of the formal and informal job search methods
may be, to some extent, attributed to the contextual characteristic of the Chinese labor
market, this study has a general theoretical implication by illustrating an alternative
perspective to understand how social capital functions in instrumental activities, such as job
search. Namely, contact use pays off not through the informal channel alone, but by
embedding the use of social contacts in the process of mobilizing formal job search methods.
By distinguishing individuals who use contacts jointly with formal job search methods from
those who only rely on contact use, this study inspires future research to examine
125
“homophily” as the theoretical foundation, rather than the counterevidence, of the causal
effects of contact use on instrumental activities.
126
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Chapter 5 Conclusion and Discussion
5.1. Overview of the Dissertation
Within the context of China’s employment system change until 2003, this dissertation
systematically investigated the application of social capital in employment activities, by
focusing on its institutional constraints, working mechanisms, and advantages.
I first explained the pervasive existence of contact use in urban China by tracing its
institutional origin. By understanding institutional change from the constructive perspective,
individuals’ job search behaviors are not just directed by the state’s changing employment
policies, but are one of the driving forces that have impacted the trajectory of China’s
employment system change. In the first paper, I discussed individual coping strategies for job
search success from three aspects. As I demonstrated, guanxi manipulation (mainly through
family ties) persists across pre- and post-reform eras. However, since the start of the
employment system change, the mobilization of guanxi has increasingly been accompanied
by one’s formal qualifications. Corresponding to new meritocratic requirements in the job
assignment system, individuals pursued education actively. When educational degree itself is
not sufficient to get an assigned job due to the declination of the job assignment system,
individuals sought party membership to supplement their educational qualifications. The fact
that individuals’ reliance on contact use is accompanied by their active investment in
education and political resources lends legitimacy to my following studies, in which I
examined the use of contacts in combination with formal channels to employment.
From the perspective of certifiability of qualifications at the stages of recruitment and
selection, in the second paper I theorized a new approach to examining the use of social
capital in employment activities. Based on the variation of certifiability of required
qualifications for a job position, I categorized four basic types of job-person matching
patterns and their extensions. I found that certifiable and uncertifiable qualifications are both
required by the majority of job positions. For this reason, the employer’s hiring strategies
often display as a certain combination of formal and informal channels. Consequently, at the
job applicant’s side, those who are able to mobilize both formal and informal job search
methods to match up with the employer’s hiring expectations are presumably more likely to
succeed in the labor market. An essential message from this paper is that contact use indeed
131
plays a positive role in job-person matching, but very often in combination with the use of
formal channels, instead of functioning alone.
In the third paper, I examined the causal effects of contact use with the homophily
characteristic taken into account. Indeed, contact use is endogenous to other types of
resources (i.e., human capital and political credentials) one possesses. Although pro-social-
capital scholars (Fernandez 2012; Lin 2001; Lin and Ao 2008) argue that homophily is the
reason that social capital can exert positive effects on labor market outcomes, it is unclear
why this is the case. My answer to this question is that contact use is not exogenous, but
endogenous to individual formal (or certifiable) qualifications. The use of contacts exerts
positive effects only when it is combined with one’s formal qualifications. Thus, I verified
the causal effects of social capital on job search by comparing the joint use of formal and
informal search methods with the use of either formal or informal methods only. This is
different from the conventional approach, by which the dichotomy between contact use and
formal job search channels is assumed. Findings show that during a search process,
individuals who used the formal-informal joint channel tend to obtain more job information
and apply for more jobs, compared to their counterparts who used either the formal or
informal channel only. This type of job seeker is also more likely find a job within three
months. With respect to late-stage career development (indicated by recent income), the ESR
results show that the use of the joint channel itself indeed exerts a positive effect. However,
the positive effect of the joint channel is likely to be underestimated, because individuals
who possess typical characteristics of using the joint channel may actively choose to use
either type of the single channels. This is possible, because individuals’ perception of “good”
jobs is shaped by the co-development of state power and market strength in China’s
transitional economy. Also, failing to predict long-term benefits of the use of the joint
channel may also contribute into individuals’ decision-making in favor of using a less costly
single channel. Once the self-selection effect is taken into account, however, the causal effect
of the use of the joint channel is strongly supported. The third paper demonstrated the
existence of the casual effects of contact use on job search success, not despite homophily,
but exactly due to the homophily principle.
Putting these three papers together, this dissertation has contributed to the literature in two
areas: social stratification and inequality, and social capital.
132
5.2. Contributions in the Area of Social Stratification and Inequality
As one of the foremost transitional economies, the case of China’s socioeconomic transition
has provided an excellent real-world laboratory for scholars to test a variety of theories that
aim to explain massive social changes. Despite the differences in theories (Bian and Logan
1996; Nee 1989, 1991; Parish and Michelson 1996; Rona-Tas 1994; Walder 2004; Zhou
2000; Zhou et al. 1997), scholars have investigated the empirical evidence from the same
approach— focusing on the impacts of the stratified social structure on individuals’
socioeconomic statuses. However, this structural approach solely focused on stratification
outcomes does not explain the origin of social stratification. The direct consequence of this
shortcoming is that studies about China’s transitional economy fail to explicate why two
seemingly contradictory social forces – state power and the market strength – have co-
developed in China’s case.
In this dissertation, I demonstrated that this theoretical defect can be corrected by adopting a
constructive perspective. Focusing on the process of the transition, my dissertation delineates
how the co-development of the state and the market can be explained as a ceaseless
interaction between state policies and individual coping strategies towards them.
Beyond the contextual concern, I want to emphasize that a constructive perspective, which is
focused on the interaction process between structural factors and individual behaviors, should
be a powerful theoretical tool that can be used to understand any type of large-scale social
change. My dissertation has exemplified that understanding the formation process of a social
institution is of great importance to understand the foundation of the stratified social structure
and its consequences.
5.3. Contributions in the Area of Social Capital
An on-going debate in social capital studies lies in the challenge of homophily against the
causal effects of contact use. In my dissertation, I pointed out that the conventional
dichotomy between using and not using social contacts in employment activities is
problematic. Since social capital is endogenous to other types of “formal” resources, i.e.,
human capital (as well as political credentials in China’s case), according to the homophily
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explanation, the positive effects of social capital should be seen when social capital is
combined with other types of resources, rather than used alone. This proposition is
theoretically legitimate as well as empirically effective. Theoretically, focused on
certifiability of qualifications required for a job position, my dissertation demonstrated that
the joint use of formal and informal job-person matching channels is more common than the
use of either formal or informal channels alone. Since most job positions require both
certifiable and uncertifiable qualification, individuals who often succeed in the labor market
are not those who possess the best certifiable qualifications but poor quality social contacts.
Instead, an individual’s certifiable qualifications only need to be sufficient to meet the
employer’s hiring expectations. Under the condition that an individual’s certifiable
qualifications match the corresponding job requirements, the employer would turn to value
this individual’s uncertifiable qualifications conveyed through social contacts, rather than
more certifiable qualifications. In my third dissertation paper, the joint use of formal and
informal job search methods was found to have significant advantages during job search as
well as after job search, relative to the use of either type of single channels.
In short, the innovative way to study roles social capital play in job search in my dissertation
is to distinguish those who can mobilize social contacts and formal job search channels
jointly from those who rely solely on either contact use or formal job search methods. The
strong evidence of my argument may have a certain association with the Chinese context. As
I mentioned before, one must bear in mind that the labor market of post-socialist China is
characterized as a labor-oversupply market. Especially, the oversupply of highly-educated
job seekers may lift up the average requirement for formal qualifications. This may lead to
the fact that formal or certifiable qualifications are required by default, even for positions that
mainly concern uncertifiable qualifications.
Despite that, the theoretical approach of distinguishing individuals who use contacts jointly
with formal search methods from those who have no other options but to only rely on
contacts can be considered a universal way to address the homophily issue. Depending on the
institutional context, individual characteristics may vary among job seekers who use the joint
job search channel, who only use the formal channel, and who only use the informal channel;
so do the consequences of three scenarios.
134
5.4. Directions of Future Research
Future research extended from this dissertation will be conducted beyond the Chinese
context. Despite the use of the empirical evidence in China’s transitional economy, my
doctoral research aims to elaborate on a universal theory of contact use by focusing on the
interaction between institutional constraints and individual behaviors. To test this theoretical
perspective, I will first compare different transitional economies, such as China, Vietnam,
Russia, and Eastern European countries. It would be interesting to find out if the differences
in labor market institutions among those countries can be explained not only by the
differences in macro-level policies, but more importantly, by the differences caused by
individuals’ active reactions towards those policies.
Furthermore, this theoretical perspective should also have explanatory power for institutional
change in a relatively stable economy. For example, scholars’ (Granovetter 1974; Lin et al.
1981; Marsden and Campbell 1990; Marsden and Hurlbert 1988) findings about the
dominant use of weak ties in the American labor market can be explained by the constructive
perspective. Responding to the institutional constraint— segregation of the labor market in
the dimensions of race, ethnicity, immigration status, gender, and so on, individuals may
choose to mobilize weak ties. Traversing network boundaries means that one can access
better employment opportunities in sectors of the labor market that one might have been
segregated from due to one’s individual characteristics.
Comparative studies are also required in terms of testing the theory of the “joint use of
formal and informal employment channels.” My central argument in this respect is that the
homophily issue can universally be addressed by making a distinction between individuals
who use formal and informal search channels jointly and those who can only rely on informal
channels. If so, I expect the differences in effects of contact use across societies do not
contradict, but support the argument that the positive effects of social capital on job search
shows in the joint use of formal and informal channels in a variety of societal contexts.
Overall, although this dissertation specifically investigated employment activities in the
context of China’s transitional economy, theories derived from this dissertation can be
generalized beyond a certain social context. Focusing on meso-level social relations, studies
on social capital have a unique strength to link the macro social structure and individuals at
135
the micro level. Understanding this linkage not only sheds light on the question of how social
capital functions in a particular social context, but also provides inspiration in terms of the
origin of social stratification and inequality. This constructive perspective consequently
brings to the fore the necessity of addressing the homophily issue in social capital studies.
My solution to facing the challenge of homophily is to differentiate individuals who use
formal and informal job search methods jointly from those who rely solely on contact use.
Comparative studies are needed to confirm if the approach of singling out the joint use of
formal and informal channels can also offer proper explanations to effects of contact use in
other social contexts.
136
References
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——. 2001. Social Capital: A Theory of Social Structure and Action. New York: Cambridge University Press.
Lin, Nan and Dan Ao. 2008. “The Invisible Hand of Social Capital: An Exploratory Study.” Pp. 107-132 in Social Capital: An International Research Program, edited by Nan Lin and Bonnie H. Erickson. New York: Oxford University Press.
Lin, Nan, John C. Vaughn, and Walter Ensel. 1981. “Social Resources and Occupational Status Attainment.” Social Forces 59:1163-81.
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Marsden, Peter V., and Jeanne S. Hurlbert. 1988. “Social Resources and Mobility Outcomes: A Replication and Extension.” Social Forces 66(4):1038-59.
Nee, Victor. 1989. “A Theory of Market Transition: From Redistribution to Markets in State Socialism.” American Sociological Review 54(5):663-81.
——. 1991. “Social Inequalities in Reforming State Socialism: Between Redistribution and Markets in China.” American Sociological Review 56(3):267-82.
Parish, William L., and Ethan Michelson. “Politics and Markets: Dual Transformations.” American Journal of Sociology 101(4):1042-59.
Rona-Tas, Akos. 1994. “The First Shall Be the Last? Entrepreneurship and Communist Cadres in the Transition from Socialism.” American Journal of Sociology 100(1):40-69.
Walder, Andrew G. 2004. “The Party Elite and China’s Trajectory of Change.” China: An International Journal 2(2):189-209.
Zhou, Xueguang. 2000. “Economic Transformation and Income Inequality in Urban China.” American Journal of Sociology 105 (4):1135-74.
Zhou, Xueguang, Nancy Brandon Tuma, and Phyllis Moen. 1997. “Institutional Change and Job-shift patterns in Urban China, 1949 to 1994.” American Sociological Review 62(3):339-365.
137
Appendices
Appendix A.
Descriptive Statistics of the Qualitative Data
Variables Values Percentage Gender Male 57.6 Female 42.4 Age Below 30 42.4 30-40 30.3 Above 40 27.3 Party Membership Party members 48.5 Non-party members 51.5 Years of education Less than 6 years 15.2 6-12 years 21.2 13-16 years 15.2 Above 16 years 48.4 Father's party membership
Party members 48.5
Non-party members 51.5 Father's education Less than 6 years 36.4 6-12 years 33.3 13-16 years 18.2 Above 16 years 12.1 Era of job entry <1979 15.2 1979-1992 12.1 >1992 72.7 Location Beijing 36 Shenzhen 32 Jiangyou 32
138
Appendix B. Distribution of the Year of Job Entry, CGSS 2003, Urban Section
Year of job entry Freq. Percent Cum.
Year of job entry Freq. Percent Cum.
1944 1 0.02 0.02 1984 116 2.21 43.2 1945 2 0.04 0.06 1985 141 2.69 45.89 1946 1 0.02 0.08 1986 161 3.07 48.96 1947 2 0.04 0.11 1987 149 2.84 51.8 1948 1 0.02 0.13 1988 108 2.06 53.86 1949 3 0.06 0.19 1989 120 2.29 56.15 1950 9 0.17 0.36 1990 159 3.03 59.18 1951 1 0.02 0.38 1991 126 2.4 61.59 1952 10 0.19 0.57 1992 158 3.01 64.6 1953 15 0.29 0.86 1993 158 3.01 67.61 1954 16 0.31 1.16 1994 130 2.48 70.09 1955 7 0.13 1.3 1995 151 2.88 72.97 1956 39 0.74 2.04 1996 136 2.59 75.57 1957 24 0.46 2.5 1997 150 2.86 78.43 1958 75 1.43 3.93 1998 173 3.3 81.73 1959 44 0.84 4.77 1999 163 3.11 84.84 1960 42 0.8 5.57 2000 204 3.89 88.73 1961 30 0.57 6.14 2001 172 3.28 92.01 1962 42 0.8 6.94 2002 255 4.86 96.87 1963 35 0.67 7.61 2003 164 3.13 100 1964 48 0.92 8.53 Total 5,243 100 1965 48 0.92 9.44 1966 47 0.9 10.34 1967 31 0.59 10.93 1968 59 1.13 12.05 1969 55 1.05 13.1 1970 102 1.95 15.05 1971 71 1.35 16.4 1972 69 1.32 17.72 1973 52 0.99 18.71 1974 64 1.22 19.93 1975 97 1.85 21.78 1976 106 2.02 23.8 1977 62 1.18 24.99 1978 115 2.19 27.18 1979 177 3.38 30.56 1980 161 3.07 33.63 1981 126 2.4 36.03 1982 137 2.61 38.64 1983 123 2.35 40.99
139
Appendix C.
Descriptive Statistics for Variables Used in the Quantitative Study
140
Appendix D.
Decomposition of Group Differences in ESR Estimations
(Formulas are quoted from Gerber 2000: 37 and 44. Gerber, Theodore P. 2000. “Membership Benefits or Selection Effects? Why Former Communist Party Members Do Better in Post-Soviet Russia.” Social Science Research 29:25-50.)
In an ESR model, every case is estimated twice— one is when this case is in its actual group,
and the other is when this case is hypothetically switched to the opposite group. Thus, four
scenarios are estimated in an ESR model. For two observed groups, the expected outcome is
formulated as follows:
)]}(/[)](){[/()0|( 31311 iikik
kii ZZXZYE))
Φ+=> ∑ φσσβ (7)
and
)]}(1/[)](){[/()0|( 32322 iikik
kii ZZXZYE))
Φ−−=< ∑ φσσβ
where βkXk denotes effects of measurable characteristics, σ13 and σ23 denote the covariance
of the disturbances ε1 and ε2 with ε3, φ denotes the normal probability density function, and
Φ denotes the cumulative normal probability function. In Tables 6 and 8, while ƩβkXk
indicates differences caused by the types of job search channels (shown in Panels A), the
second half of the decomposition equation indicates the self-selection effects (shown in
Panels B). The final result derived from each equation indicates the total logged income
(shown in Panels C).
The expected outcome in two hypothetical scenarios, in which the case is switched to the
opposite group, can be formulated as follows:
)]}(/[)](){[/()0|( 32322 iikik
kii ZZXZYE))
Φ+=> ∑ φσσβ (9)
and
)]}(1/[)](){[/()0|( 31311 iikik
kii ZZXZYE))
Φ−−=< ∑ φσσβ (10)
(8) (8)
141
Appendix E.
In-Depth Interview Guide Part I. Ask the interviewee to introduce the current workplace and job position.
1. First of all, I want to know about your current workplace. Could you please give me a brief introduction about your current workplace?
2. I also want to know what you usually do at work. Could you please tell me what your current job is like?
3. How long have you been in this workplace? 4. Compared to your co-workers who entered the workplace in the same year with you,
how do you feel about your career progress?
Part II. The processes of job searches 5. I am interested in how you entered this workplace. Could you tell me your story about
how you entered this workplace? 1) Before the application
i. What was your experience before applying for this job? ii. How did you know there was a position opening in the workplace? iii. What made you decide to apply for that position?
2) During the application (If interviewees accepted the job without applying, skip
this step). i. OK, you decided to apply for that job position. I’m interested in what
happened next. Could you tell me what you did to get the job? ii. Your job-search story is very interesting. When you look back now, what
step(s) would you think was/were crucial for you to get the job in this workplace? Can you tell me the reason?
iii. Yes, I can see how important this step was for you, but what do you think about other step(s)/ job-search efforts you did?
3) Decision making: Why did you accept the job offer? i. How many job offers did you have when you received the one from this
workplace? How many potential job offers did you have at that moment – that is, jobs for which you were still waiting for the final decision from the employers?
ii(1). For interviewees who had more than one job offer, including potential job offers: a) What were your other job offers or potential job offers? b) What made you choose the offer from this workplace, among all the
offers you got or would have a chance to get? c) To what extent do you think the job offer met your expectations at that
moment? d) If you could go back, would you still choose to accept the offer? Why
or why not? ii(2). For interviewees who had only one job offer:
e) What directly led you to accept the job offer?
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f) To what extent do you think the job offer met your expectation at that moment?
g) If you could go back, would you still choose to accept the offer? Why or why not?
Part III: Background information 6. Gender and age 7. Educational experience 8. Re-confirmation of party membership 9. Family background
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Appendix F.
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