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

Author

Listed:
  • 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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    References listed on IDEAS

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    Cited by:

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    2. Chen, Zhu & Zhang, Jipeng & Zhou, Kang, 2026. "Endogenous migration restrictions and population aging in China," Journal of Development Economics, Elsevier, vol. 179(C).
    3. Wenjie Zhang & Xianqiang Zou & Chuliang Luo & Lulu Yuan, 2024. "Hukou reform and labor market outcomes of urban natives in China," Journal of Population Economics, Springer;European Society for Population Economics, vol. 37(2), pages 1-41, June.
    4. Xue Qiao & Lili Wang, 2025. "Migration, household services, and urban female labor supply: evidence from China," Journal of Population Economics, Springer;European Society for Population Economics, vol. 38(4), pages 1-32, December.
    5. Chen, Zhu & Shang, Qianqian & Zhang, Jipeng, 2024. "Recent progress in hukou reform and labor market integration in China: 1996–2022," China Economic Review, Elsevier, vol. 87(C).
    6. Guan, Chenghua & Xu, Wanting & Yang, Peijin & Xiao, Yao & Rasul, Byann, 2025. "How does large-scale internal migration affect innovation? Evidence from China," Technological Forecasting and Social Change, Elsevier, vol. 218(C).
    7. Wang, Susu & Yu, Xinfan & Wei, Zhixing & Liang, Chao, 2025. "When education policy drives migration: The impact of reform allowing migrants to take the local “Gaokao” on children’s migration," Journal of Asian Economics, Elsevier, vol. 100(C).
    8. Qurat ul Ain, 2025. "Optimizing China's economic performance through government hierarchy restructuring," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 33(2), pages 487-516, April.
    9. Aiyan Xu & Jianfeng He & Xin Xin, 2025. "Language Skills and Income: Evidence from Xizang’s Rural Households in China," SAGE Open, , vol. 15(3), pages 21582440251, September.
    10. Gao, Yawen & Li, Lun & Liang, Xin, 2025. "Measuring MPC heterogeneity in China: Insights from household registration reform," China Economic Review, Elsevier, vol. 94(PC).

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