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Inequality and Internal Migration in China: Evidence from Village Panel Data

Author

Listed:
  • Wei Ha

    () (Policy Specialist at the Human Development Report Office, UNDP)

  • Junjian Yi

    () (Economics Department of the Chinese University of Hong Kong)

  • Junsen Zhang

    () (Economics Department of the Chinese University of Hong Kong)

Abstract

This paper analyzes the impact of rural-to-urban migration on income inequality and gender wage gap in source regions using a newly constructed panel dataset for around 100 villages over a ten-year period from 1997 to 2006 in China. Since income inequality is time-persisting, we use a system GMM framework to control for the lagged income inequality, in which contemporary emigration is also validly instrumented. We found a Kuznets (inverse U-shaped) pattern between migration and income inequality in the sending communities. Specifically, contemporary emigration increases income inequality, while lagged emigration has strong income inequalityreducing effect in the sending villages. A 50-percent increase in the lagged emigration rate translates into one-sixth to one-seventh standard deviation reduction in inequality. These effects are robust to the different specifications and different measures of inequality. More interestingly, the estimated relationship between emigration and the gender wage gap also has an inverse Ushaped pattern. Emigration tends to increase the gender wage gap initially, and then tends to decrease it in the sending villages.

Suggested Citation

  • Wei Ha & Junjian Yi & Junsen Zhang, 2009. "Inequality and Internal Migration in China: Evidence from Village Panel Data," Human Development Research Papers (2009 to present) HDRP-2009-27, Human Development Report Office (HDRO), United Nations Development Programme (UNDP), revised Jul 2009.
  • Handle: RePEc:hdr:papers:hdrp-2009-27
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    References listed on IDEAS

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    1. Du, Yang & Park, Albert & Wang, Sangui, 2005. "Migration and rural poverty in China," Journal of Comparative Economics, Elsevier, vol. 33(4), pages 688-709, December.
    2. de Brauw, Alan & Giles, John, 2008. "Migrant labor markets and the welfare of rural households in the developing world : evidence from China," Policy Research Working Paper Series 4585, The World Bank.
    3. David Card, 2009. "Immigration and Inequality," American Economic Review, American Economic Association, pages 1-21.
    4. Stark, Oded & Bloom, David E, 1985. "The New Economics of Labor Migration," American Economic Review, American Economic Association, vol. 75(2), pages 173-178, May.
    5. Mckenzie, David & Rapoport, Hillel, 2007. "Network effects and the dynamics of migration and inequality: Theory and evidence from Mexico," Journal of Development Economics, Elsevier, vol. 84(1), pages 1-24, September.
    6. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    7. Benjamin, Dwayne & Brandt, Loren & Giles, John, 2005. "The Evolution of Income Inequality in Rural China," Economic Development and Cultural Change, University of Chicago Press, vol. 53(4), pages 769-824, July.
    8. Stark, Oded & Taylor, J. Edward & Yitzhaki, Shlomo, 1988. "Migration, remittances and inequality : A sensitivity analysis using the extended Gini index," Journal of Development Economics, Elsevier, vol. 28(3), pages 309-322, May.
    9. Shahid Yusuf & Tony Saich, 2008. "China Urbanizes : Consequences, Strategies, and Policies," World Bank Publications, The World Bank, number 6337.
    10. Meng, Xin & Zhang, Junsen, 2001. "The Two-Tier Labor Market in Urban China: Occupational Segregation and Wage Differentials between Urban Residents and Rural Migrants in Shanghai," Journal of Comparative Economics, Elsevier, vol. 29(3), pages 485-504, September.
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    Citations

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    Cited by:

    1. Ranathunga, Seetha P.B., 2011. "Impact of rural to urban labour migration and the remittances on sending household welfare: a Sri Lankan case study," MPRA Paper 35943, University Library of Munich, Germany, revised 14 Dec 2011.
    2. Wilson, E. J. & Jayanthakumaran, K. & Verma, R., 2012. "Demographics, Labor Mobility, and Productivity," ADBI Working Papers 387, Asian Development Bank Institute.

    More about this item

    Keywords

    Internal Migration; Inequality; System GMM;

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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