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Abstract: Using data of CGSS 2008, we examine income differentials between hukou converters and urbanites by looking at three mechanisms: reference group, institutional sectors, and social capital. The findings are as follows: (1) Hukou converters have higher income than urbanites in private sectors; (2) they earn less than urbanites when they work in party and government offices; (3) the two groups have roughly equal income when they work in state-owned enterprises; and (4) hukou converters’ comparative disadvantages can be attributed to the lack of social capital in the cities.
Key words: Hukou Converters, Institution Sectors, Social Capital, Income