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China’s Mobility Barriers and Employment Allocations

Author

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  • 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
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    References listed on IDEAS

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    2. Jia Barwick, Panle & Liu, Yanyan & Patacchini, Eleonora & Wu, Qi, 2019. "Information, Mobile Communication, and Referral Effects," CEPR Discussion Papers 13786, C.E.P.R. Discussion Papers.
    3. Ayerst, Stephen & Brandt, Loren & Restuccia, Diego, 2020. "Market constraints, misallocation, and productivity in Vietnam agriculture," Food Policy, Elsevier, vol. 94(C).
    4. Tasso Adamopoulos & Loren Brandt & Jessica Leight & Diego Restuccia, 2017. "Misallocation, Selection and Productivity: A Quantitative Analysis with Panel Data from China," Working Papers tecipa-593, University of Toronto, Department of Economics.
    5. Mark Colas & Suqin Ge, 2019. "Transformations in China’s Internal Labor Migration and Hukou System," Journal of Labor Research, Springer, vol. 40(3), pages 296-331, September.
    6. Cui, Kun & Li, Bo & Wang, Hanyang, 2021. "Quantitative analysis of health insurance reform in China: Pure consolidation or universal health insurance?," Economic Modelling, Elsevier, vol. 101(C).
    7. Ye, Maoxin & Lyu, Zeyu, 2020. "Trust, risk perception, and COVID-19 infections: Evidence from multilevel analyses of combined original dataset in China," Social Science & Medicine, Elsevier, vol. 265(C).
    8. Monteforte, Fabio, 2020. "Structural change, the push-pull hypothesis and the Spanish labour market," Economic Modelling, Elsevier, vol. 86(C), pages 148-169.

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    More about this item

    Keywords

    Chinese immigration; Chinese land policy; Imperfect rent; Hukou registration; Social transfers;
    All these keywords.

    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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