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the informal sector – particularly manufacturing, services, and construction– where work is dangerous, dirty, and low paid. In addition, rural migrantsare generally still not eligible for work-place and state-sponsored socialsecurity protections, including membership in labor organizations, old-agepensions, health care insurance, and public education. In other words, Caiand Wang claim, “There is severe discrimination against rural workers inurban labor markets.”Neoclassical economic theory predicts that increased labor mobility andrural–urban migration should narrow regional and rural–urban disparities,but in China the reverse has happened, with both rural–urban and regionalincome inequality growing over the last two decades. Cai and Wangargue that this is because hukou reforms remain incomplete. But theyalso recognize that reform may expose urban workers in protected stateenterprises to labor market competition and that this prospect discouragesurban governments, who put priority on maintaining low unemploymentand social stability, from pursuing reform. Cai and Wang do not explain bywhat mechanisms they expect further hukou reforms will reduce incomedisparities between rural migrants and urban workers. Their economicmodel predicts that the growth of efficient private-sector industries willincrease per capita productivity and permit wage increases for rural workers,but it also suggests that eliminating public-sector job protections of urbanworkers could increase competition in the private sector that, withoutunions or state controls, could reduce the wages of urban workers to levelscomparable to those of rural migrant workers. The general equilibriummodel that they cite does not make clear how or when wages are likely torise or fall.354Further insight into these dynamics might be drawn from Susan Carterand Richard Sutch’s study of migration to industrial labor markets in theUnited States, though their data permits them only to consider employmentrather than wages. To determine what impact migration had on U.S. urbanlabor markets at the beginning of the twentieth century, they refine the“textbook” model to take into account the effects of migrant laborers,consumption demands, increased industrial productivity, and interactiveeffects between markets. They conclude that immigration can contribute toeconomic expansion and to increases in employment and, by implication,wages as well. The historical American case may be particularly relevantto that of contemporary China because both involve periods of greatindustrial expansion, high rates of urbanization, and potential competitionbetween migrant workers and urban workers already living and employedin the cities of migrant destination.