Does self-employment mitigate the perceived discrimination? Evidence from Chinese migrant workers

While prior research has studied various outcomes of self-employment, there has been insufficient research to demonstrate the effect of self-employment on perceived discrimination, which can be an essential foundation for social stability. This paper distinguishes between two categories of rural-to-urban self-employed migrants: own-account workers and employers. Applying data from the China Migrant Dynamic Survey (CMDS) of 2017, we first find strong evidence that only the employer-type migrants are likely to have lower degrees of perceived discrimination than salaried migrants, and the results are robust to tests with alternative approaches of estimation and definition of self-employment. Moreover, we confirm that the employer-type migrants can indeed mitigate their perceived discrimination via three channels—individual income, social capital, and creation of employment opportunities. Further analysis reveals that the own-account migrants can also perceive lower levels of discrimination, but only in cities with higher levels of cultural diversity. Our study suggests that self-employed activities and cultural diversity can help relieve the perceived discrimination among rural-to-urban migrants in China, which provides important practical implications for urban policy making.