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Unequal Migration and Urbanisation Gains in China

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  • Combes, Pierre-Philippe
  • Démurger, Sylvie
  • Li, Shi
  • Wang, Jianguo

Abstract

We assess the role of internal migration and urbanisation in China on the nominal earnings of three groups of workers (rural migrants, low-skilled natives, and high-skilled natives). We estimate the impact of many city and city-industry characteristics that shape agglomeration economies, as well as migrant and human capital externalities and substitution effects. We also account for spatial sorting and reverse causality. Location matters for individual earnings, but urban gains are unequally distributed. High-skilled natives enjoy large gains from agglomeration and migrants at the city level. Both conclusions also hold, to a lesser extent, for low-skilled natives, who are only marginally negatively affected by migrants within their industry. By contrast, rural migrants slightly lose from migrants within their industry while otherwise gaining from migration and agglomeration, although less than natives. The different returns from migration and urbanisation are responsible for a large share of wage disparities in China.

Suggested Citation

  • Combes, Pierre-Philippe & Démurger, Sylvie & Li, Shi & Wang, Jianguo, 2019. "Unequal Migration and Urbanisation Gains in China," CEPR Discussion Papers 13487, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:13487
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    3. He, Xiaobo & Luo, Zijun, 2020. "Does Hukou pay? Evidence from nanny markets in urban China," China Economic Review, Elsevier, vol. 63(C).
    4. Gharad Bryan & Edward Glaeser & Nick Tsivanidis, 2019. "Cities in the Developing World," NBER Working Papers 26390, National Bureau of Economic Research, Inc.
    5. Carlos Carreira & Luís Lopes, 2020. "How are the potential gains from economic activity transmitted to the labour factor: more employment or more wages? Evidence from the Portuguese context," Regional Science Policy & Practice, Wiley Blackwell, vol. 12(2), pages 319-348, April.
    6. Rodrigo C. Oliveira & Raul da Mota Silveira Neto, 2021. "Re-examining the Brazilian South-Northeast labour income gap: A decomposition approach," WIDER Working Paper Series wp-2021-117, World Institute for Development Economic Research (UNU-WIDER).
    7. David Mhlanga & Rufaro Garidzirai, 2020. "Energy Demand and Race Explained in South Africa: A Case of Electricity," Eurasian Journal of Business and Management, Eurasian Publications, vol. 8(3), pages 191-204.
    8. Wenquan Liang & Ran Song & Christopher Timmins, 2020. "Frictional Sorting," NBER Working Papers 27643, National Bureau of Economic Research, Inc.
    9. Qian Zhang & Joris Hoekstra, 2020. "Policies towards Migrants in the Yangtze River Delta Urban Region, China: Does Local Hukou Still Matter after the Hukou Reform?," Sustainability, MDPI, Open Access Journal, vol. 12(24), pages 1-24, December.
    10. Ahlfeldt, Gabriel M. & Pietrostefani, Elisabetta, 2019. "The economic effects of density: a synthesis," LSE Research Online Documents on Economics 100482, London School of Economics and Political Science, LSE Library.
    11. Yishao Shi & Haoran Ren & Xiatong Guo & Tianhui Tao, 2020. "Implementation and Advancement of a Rural Residential Concentration Strategy in the Suburbs of Shanghai," Land, MDPI, Open Access Journal, vol. 9(10), pages 1-17, October.
    12. Barbieri, Elisa & Di Tommaso, Marco R. & Pollio, Chiara & Rubini, Lauretta, 2020. "Getting the specialization right. Industrialization in Southern China in a sustainable development perspective," World Development, Elsevier, vol. 126(C).

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    More about this item

    Keywords

    agglomeration economies; China; human capital externalities; migrants; urban development; wage disparities;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • 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

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