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China’s Mobility Barriers and Employment Allocations

Author

Listed:
  • L Rachel Ngai

    () (Centre for Macroeconomics (CFM)
    London School of Economics (LSE))

  • Christopher A Pissarides

    () (Centre for Macroeconomics (CFM)
    London School of Economics (LSE)
    Hong Kong University of Science and Technology)

  • Jin Wang

    () (Hong Kong University of Science and Technology)

Abstract

China's hukou system imposes two main barriers to population movements. Agricultural workers get land to cultivate but are unable to trade it in a frictionless market. Social transfers (education, health, etc.) are conditional on holding a local hukou. We show that the land policy leads to over-employment in agriculture and it is the more important barrier to industrialization. Effective land tenure guarantees and a perfect competitive rental market would correct this inefficiency. The local restrictions on social transfers favour rural enterprises over urban employment with a relatively smaller impact on industrialization.

Suggested Citation

  • L Rachel Ngai & Christopher A Pissarides & Jin Wang, 2018. "China’s Mobility Barriers and Employment Allocations," Discussion Papers 1811, Centre for Macroeconomics (CFM).
  • Handle: RePEc:cfm:wpaper:1811
    as

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    File URL: http://www.centreformacroeconomics.ac.uk/Discussion-Papers/2018/CFMDP2018-11-Paper.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Chinese immigration; Chinese land policy; Imperfect rent; Hukou registration; Social transfers;

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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