Migration, Urbanization, and Labor Market Outcomes in China
Saturday, Jan. 6, 2018 12:30 PM - 2:15 PM
- Chair: Suqin Ge, Virginia Tech
Temporary Migration, Lasting Effects: Human Capital Investment and the Dynamic Effects of Trade and Migration in China
AbstractThis paper studies short and long run effects of trade and migration costs on human capital accumulation, skill premium, income inequality and aggregate productivity in China. We construct a multi-sector multi-region dynamic general equilibrium model featuring internal and international trade, and migration across regions and sectors by workers heterogeneous in their age and skill levels. We explicitly incorporate China's Hukou registration system into the model. The Hukou system imposes differential costs on migrant workers with different age and skill levels. The migration reform in recent years relaxed the restriction on migrant workers to work in cities, but has done little in easing migrants access to local public services, a major obstacle for permanent migration. Such a partial reform encourages young unskilled workers to opt for temporal migration for higher income opportunities against human capital investment. We show that the trade liberalization and partial migration reform may lead to increases in skill premium and income inequality in the long-run. We argue that a more complete reform of the Hukou system that allows all workers to potentially migrate to cities permanently is crucial for reducing income inequality in the long run. We fit the model to China by mapping it directly into data for China's provinces and sectors, and the rest of the world. Our paper departs from Tombe and Zhu (2015) by modeling migration decisions in a dynamic setting and incorporating endogenous human capital investment decisions. Our model shares the dynamic features of Caliendo, Dvorkin and Parro (2015), but differs from them in having endogenous human capital investment decisions and heterogeneity in age and skills among workers, the features that are crucial for studying the long-run impacts of trade and migration reforms.
Transportation and Urbanization in China's Urban Hierarchy
AbstractWe study the impact of highway access on the spatial distribution of urban and rural employments in Chinese counties. We adopt a difference-in-difference design to identify the causal relationship, and use historical routes as instrumental variables to address the endogeneity problem caused by the non-random placements of highway infrastructures. Using the data of Chinese counties and the national trunk highway from 2002 to 2009, we find that highway access leads to decrease of both rural and urban employments in Chinese counties. Furthermore, we find that the reduction of urban and rural employments of a county cause by the highway access depends on its distance to the nearest major cities with different hierarchy. Our findings suggest the failure of the urban development strategy imposed by Chinese government, that is, to limit the growth of big cities but promote the expansion of small cities what they called "local urbanization".
Migrants and Firms: Evidence from China
AbstractThis paper studies how the urban sector adjusts to large inflows of workers from rural areas in China. We identify exogenous shocks to migrant outflows caused by variation in international agricultural prices, which we combine with a gravity model to predict migrant inflows to urban centers. We use these predictions to estimate the causal impact of migrant inflows on the urban economy. A nationally representative household survey and a census of large firms independently confirm that migration decreases labor costs. In the average firm, employment increases, capital to labor ratio decreases and total factor productivity declines. We document heterogeneous responses to migration shocks to explore their effect on factor (mis)allocation across firms.
Wages, Innovation, and Employment in China
AbstractWe investigate the role of factor-priced-induced innovation in mediating the employment impact of expanding production in China. Our empirical approach implements concepts developed in Acemoglu (2010) and complements the approaches summarized by Wei, Xie, and Zhang (2017) that focus on directly observable aspects of innovation (R&D, patent activity, etc.); labor-force characteristics including the availability of “surplus” labor , investments in human capital; and investments in physical capital. It complements work on the causes of a decline in labor’s share in total output as documented in Bai and Qian (2010) and in Molero-Simarro (2017). Our empirical results to date support the hypothesis that wage-induced technology change has influenced productivity growth in China, at least in the decade of the 1990s, but perhaps less so or not at all after the middle of the next decade.
- J3 - Wages, Compensation, and Labor Costs