The career intention of informal workers in China: voluntary or forced?

There have been many studies show that there are significant differences in wages between China's workers engaged in formal employment and informal employment, but very few studied the career intention of informal workers. Informally workers in such a disadvantageous position, are they voluntary or forced to engage in informal employment? In China, there is still no empirical research in this area, the purpose of this study is to clarify the career intention of informal workers to provide evidence for policy makers that which part of the informal workers should the government policies support and help.We employ the econometric model which is developed by Günther and Launovboth (2012). It is able to detect unobserved heterogeneity in the informal labor force. The framework can be classified as a finite mixture regression with sample selection. It provides us with consistent estimates of wage equations within any of the segments of the informal workers, taking selection bias into consideration. Furthermore, it can help us to identify the size of voluntary and forced informal workers in the whole informal labor force.The results show that not all the informally employed workers are in a disadvantageous position, voluntary and forced informal workers accounts for about half of all the informal labor force, respectively.