The Preference for Larger Cities in China: Evidence from Rural-Urban Migrants
AbstractChina has long aimed to restrict population growth in large cities but encourages growth in small and medium-sized cities. At the same time, various government policies favor large cities. We conjecture that larger cities in China have more urban amenities and a better quality of life. We thus predict that a typical rural-urban migrant is willing to give up some income in order to live in a larger city. We present a simple model in which rural-urban migrants choose destination cities to maximize utilities from consumption and urban amenities. Drawing data from a large-scale population survey conducted in 2005, we first estimate each migrant's expected earnings in each possible destination city using a semi-parametric method to correct for potential selection bias. We then estimate the typical migrant's preference for city population size, instrumenting population size with its lagged values to control for potential omitted-variables bias. From these estimation results, we calculate the typical migrant's willingness to pay to live in larger cities. Our results show that indeed rural-urban migrants strongly prefer cities with larger populations. We explore possible explanations for this preference and discuss the implications of these findings.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7562.
Length: 35 pages
Date of creation: Aug 2013
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Find related papers by JEL classification:
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
- R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-09-06 (All new papers)
- NEP-DEM-2013-09-06 (Demographic Economics)
- NEP-MIG-2013-09-06 (Economics of Human Migration)
- NEP-TRA-2013-09-06 (Transition Economics)
- NEP-URE-2013-09-06 (Urban & Real Estate Economics)
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