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Relaxing Hukou: Increased labor mobility and China’s Economic Geography

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  • Bosker, Maarten
  • Brakman, Steven
  • Garretsen, Harry
  • Schramm, Marc

Abstract

China’s Hukou system poses severe restrictions on labor mobility. This paper assesses the consequences of relaxing these restrictions for China’s internal economic geography. We base our analysis on a new economic geography model. First, we obtain estimates of the important model parameters on the basis of information on 264 of China’s prefecture cities over the period 1999-2005. Second, and by using our estimation results as input, we simulate various long-run scenarios of China’s internal economic geography that differ in their degree of interregional labor mobility. We find that increased labor mobility will lead to more pronounced core-periphery outcomes. Interestingly, these agglomerations are not necessarily along the coastal regions. Given the increased importance of China’s internal market, firms agglomerate in the populous heartland of China. China’s internal demand will be the most important determinant of its future economic geography.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8106.

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Date of creation: Nov 2010
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Handle: RePEc:cpr:ceprdp:8106

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Keywords: China; economic geography; labor mobility;

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References

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Cited by:
  1. Duranton, Gilles, 2014. "Growing through cities in developing countries," Policy Research Working Paper Series 6818, The World Bank.
  2. World Bank, 2012. "In Search of Opportunities : How a More Mobile Workforce Can Propel Ukraine’s Prosperity (Vol. 1 of 2) : Summary Report," World Bank Other Operational Studies 12268, The World Bank.

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