The transitional process in China is marked by prominent roles of state institutions, which are a key determinant of the opportunity and reward structure in the newly developing labor market. Migrant labor and the occupational and sectoral changes in the urban economy have further shaped the evolution of the labor market in Chinese cities. In this paper, I argue that labor-market returns are not only functions of human capital but are heavily influenced by state-controlled institutional status. Specifically, I examine the variations in income and benefits returns among nonmigrant urban residents, permanent migrants who possess urban residence, and temporary migrants who are denied permanent residence rights in cities. The empirical analysis employs data from a recent survey conducted in Guangzhou, one of the largest and most rapidly changing cities and one of the most popular destinations of migrant workers in China. The findings show that permanent migrants' income returns are especially high and that temporary migrants' benefits returns are especially inferior. Furthermore, they suggest that permanent migrants' advantaged positions are conducive to their continued success in the labor market when they shift to more profitable occupations and sectors such as commerce and self-employment. The findings of this paper support the notion that in China resident status functions like ascribed attributes that have effects on labor-market returns independent of achieved attributes, and that migration and labor-market segmentation are intricately related to the reward structure in the urban labor market.
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