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The impact of China's hukou restrictions on the aggregate national saving

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  • Adolfo, Cristobal Campoamor

Abstract

This paper presents a model accounting for the impact of the Chinese rural-urban migration on the stock of aggregate saving and the skill composition of the urban labor force. The novel mechanism through which immigration affects labor-market outcomes is the availability of new loanable funds for investment, which also results in endogenous skill upgrading. Given their rural hukou, which determines their higher training costs in the city, migrants skip the financial costs of human capital or residential investment. As a result, they self select as net lenders, which reduces the equilibrium local interest rates and facilitates the investment mostly of new generations of urbanites. Consequently, the aggregate labor income of people with urban hukou increases with immigration.

Suggested Citation

  • Adolfo, Cristobal Campoamor, 2014. "The impact of China's hukou restrictions on the aggregate national saving," MPRA Paper 57983, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:57983
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    File URL: https://mpra.ub.uni-muenchen.de/57983/1/MPRA_paper_57983.pdf
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    References listed on IDEAS

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    1. Heckman, James J., 2005. "China's human capital investment," China Economic Review, Elsevier, vol. 16(1), pages 50-70.
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    3. Oded Galor & Joseph Zeira, 1993. "Income Distribution and Macroeconomics," Review of Economic Studies, Oxford University Press, vol. 60(1), pages 35-52.
    4. Eswar S. Prasad & Raghuram G. Rajan, 2006. "Modernizing China's Growth Paradigm," American Economic Review, American Economic Association, vol. 96(2), pages 331-336, May.
    5. Gianmarco I. P. Ottaviano & Giovanni Peri, 2016. "Rethinking The Effect Of Immigration On Wages," World Scientific Book Chapters,in: The Economics of International Migration, chapter 2, pages 35-80 World Scientific Publishing Co. Pte. Ltd..
    6. Fan, C. Simon & Stark, Oded, 2008. "Rural-to-urban migration, human capital, and agglomeration," Journal of Economic Behavior & Organization, Elsevier, vol. 68(1), pages 234-247, October.
    7. George J. Borjas, 2003. "The Labor Demand Curve is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market," NBER Working Papers 9755, National Bureau of Economic Research, Inc.
    8. Barry Naughton, 2007. "The Chinese Economy: Transitions and Growth," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262640643, January.
    9. Meng, Xin & Zhang, Dandan, 2010. "Labour Market Impact of Large Scale Internal Migration on Chinese Urban 'Native' Workers," IZA Discussion Papers 5288, Institute for the Study of Labor (IZA).
    10. Vendryes, Thomas, 2011. "Migration constraints and development: Hukou and capital accumulation in China," China Economic Review, Elsevier, vol. 22(4), pages 669-692.
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    More about this item

    Keywords

    Rural-to-Urban Migration; hukou; human capital; saving rate;

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • P35 - Economic Systems - - Socialist Institutions and Their Transitions - - - Public Finance

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