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The role of China’s household registration system in the urban-rural income differential

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  • Ernest Boffy-Ramirez
  • Soojae Moon

Abstract

Together with the rapid growth of the Chinese economy, there has been a growing divide between the earnings of urban and rural residents. This paper focuses on China’s household registration system, or ‘hukou’, as a potential source of the earnings gap. Using multiple waves of data from the China Health and Nutrition Survey from 1993 to 2011, we take advantage of variation in hukou status generated by individual-level changes. We control for fixed individual-specific characteristics that determine earnings and estimate an urban hukou ‘premium’. Urban hukou holders earn almost 30% more than rural hukou holders, but after we account for individual fixed characteristics, the urban hukou premium drops to 6–8%. We also find important differences between men and women. The empirical evidence indicates the hukou system is a component of the urban-rural earnings differential, but its importance should not be overstated. The elimination of the hukou system alone cannot address long-standing inequities in access to social services between rural and urban populations.

Suggested Citation

  • Ernest Boffy-Ramirez & Soojae Moon, 2018. "The role of China’s household registration system in the urban-rural income differential," China Economic Journal, Taylor & Francis Journals, vol. 11(2), pages 108-125, May.
    • Handle: RePEc:taf:rcejxx:v:11:y:2018:i:2:p:108-125
    DOI: 10.1080/17538963.2018.1453103
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    Cited by:

    1. Liao, Yu & Zhang, Junfu, 2021. "Hukou status, housing tenure choice and wealth accumulation in urban China," China Economic Review, Elsevier, vol. 68(C).

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    More about this item

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J80 - Labor and Demographic Economics - - Labor Standards - - - General
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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