Income difference between highly educated migrants and highly educated local‐born workers in urban China

Abstract Our study explores the income of highly educated migrants in China. Based on the 2014 China Labor‐force Dynamics Survey (CLDS), we conducted Blinder‐Oaxaca decomposition of income among highly educated migrants. we found that highly educated migrants, with or without local hukou, have higher income than highly educated local‐born workers. We also found that highly educated migrants without local hukou have higher average income than those with local hukou. Given that the average income is high and knowing a foreign language is highly rewarded in the eastern region and that highly educated migrants without local hukou are clustered in the eastern region, a large percentage of these highly educated migrants know a foreign language and their average income is higher than that of other two groups. Our study demonstrates that not having local hukou, though it brings institutional constraints, does not necessarily lead to lower economic attainment in comparison to having local hukou. If a group has more human capital resources and is sought‐after by the labour market, its members have the luxury of moving to cities where they can maximize their income.