Of Markets and Networks: Marketization and Job Lead Receipt in Transitional China

Abstract

Market transition theory implies that increased market competition generates incentives for allocating job resources based on educational credentials and marketable skills, in contrast with traditional patronage systems that allocate employment opportunities through network membership. Yet despite the breakdown of patronage systems, further development of market institutions result in greater uncertainty, job precarity, and competition, which may promote referral hiring and diffusion of job information through social networks. This paper explores the relationship between marketization and access to employment opportunities through social networks (specifically the receipt of unsolicited job leads). Data from the Social Capital China Survey suggest that growing marketization across provinces is positively associated with receipt of unsolicited job leads. In particular, private sector development, factor market development, and legal intermediary proliferation are significantly and positively associated with an individual’s chance of receiving unsolicited job leads. The findings help clarify the mechanisms through which marketization facilitates informal exchange of job information, advancing scholarship on how concrete institutional conditions shape the significance of social networks.

The Cultural Consequences of Market Transition: An Empirical Examination of Rising Materialism in Twenty-First-Century China

“…For example, provinces that are well-known to have spearheaded China’s market reform (e.g., Guangdong and Zhejiang) are consistently ranked at the top, whereas provinces whose economies continue to rely heavily on government allocation (e.g., Gansu and Yunan) are consistently near the bottom. Across disciplines, many researchers have used this index and found theoretically plausible associations between it and a variety of outcomes, including employment practices (Cao and Rubin 2014), labor market processes (Liu, McDonald, and Chua 2022), executive compensation (Peng, Sun, and Markoczy 2015), business strategies (Shi, Sun, and Peng 2012), and regional development (Wen 2007). Although most studies use the index to measure cross-sectional differences, NERI researchers have made a conscious decision to use simple arithmetic averages to construct the index so the scores can be harmonized to maintain comparability over time (Fan, Wang, and Zhu 2007; Wang et al 2021).…”