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The Impact Of Local Fiscal And Migration Policies On Human Capital Accumulation And Inequality In China

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  • Holger Sieg
  • Chamna Yoon
  • Jipeng Zhang

Abstract

We develop and estimate a spatial overlapping generations model with heterogeneous households to study the feasibility of a recently proposed reform of internal migration policies that offers the potential of decreasing inequality within China. We find that this policy change significantly increases the college attainment of migrant children born in rural areas and, therefore, promises to increase the number of high‐skill workers. However, it requires significant tax increases to offset the reduction of the positive fiscal externalities provided by migrants.

Suggested Citation

  • Holger Sieg & Chamna Yoon & Jipeng Zhang, 2023. "The Impact Of Local Fiscal And Migration Policies On Human Capital Accumulation And Inequality In China," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 64(1), pages 57-93, February.
    • Handle: RePEc:wly:iecrev:v:64:y:2023:i:1:p:57-93
    DOI: 10.1111/iere.12597
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