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This paper examines the effect of having a labour contract on a range of employee outcomes (hours worked, social insurance coverage, subjective wellbeing and wages) for a sample of urban and migrant workers in China. A methodological contribution is that we use propensity score matching, which allows us to draw causal inferences about the relationship between having a labour contract and each of these variables. We find that the effect of having a labour contract on employee outcomes is generally large and larger than the findings in other studies suggest. As such, our results suggest that China's Labour Contract Law, which has made signing labour contracts mandatory, has been effective in improving the outcomes for Chinese workers.