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Urbanization Policy and Economic Development: A Quantitative Analysis of China’s Differential Hukou Reforms

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  • Wen-Tai Hsu

    (School of Economics, Singapore Management University)

  • Lin Ma

    (National University of Singapore)

Abstract

The household registration system (hukou system) in China has hampered rural-urban mi-gration by posing large migration friction. The system has been gradually relaxed in the past few decades, but the reforms have been differential in city size and by the coastal-inland di-vide. We find a striking contrast in the migration patterns between years 2005 and 2015; rural people tended to move more to the coastal urban region in 2005, but more to the inland urban region in 2015. We calibrate a spatial quantitative model to the world economy in both years with China being divided into the rural, coastal urban, and inland urban regions. We find that alternative urbanization policies that are not differential and that are more laissez-faire would substantially improve national welfare, in magnitudes that are comparable to the welfare gains from the trade liberalization that China has put in place in the past.

Suggested Citation

  • Wen-Tai Hsu & Lin Ma, 2020. "Urbanization Policy and Economic Development: A Quantitative Analysis of China’s Differential Hukou Reforms," Economics and Statistics Working Papers 9-2020, Singapore Management University, School of Economics.
    • Handle: RePEc:ris:smuesw:2020_009
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    Cited by:

    1. Dongmin Kong & Jiuyi Zhang & Mengxu Xiong, 2024. "The impact of low‐skilled migrants on firm productivity: Evidence from hukou reform in China," Review of Development Economics, Wiley Blackwell, vol. 28(3), pages 1192-1230, August.
    2. Xiaomeng Zhao & Lin Liu, 2022. "The Impact of Urbanization Level on Urban–Rural Income Gap in China Based on Spatial Econometric Model," Sustainability, MDPI, vol. 14(21), pages 1-23, October.
    3. Yanxu Li & Zhenfa Xie & Bo Li & Muhammad Mohiuddin, 2022. "The Impacts of In Situ Urbanization on Housing, Mobility and Employment of Local Residents in China," Sustainability, MDPI, vol. 14(15), pages 1-21, July.
    4. He, Chengxu & Liang, Yinhe & Wang, Gefei, 2025. "Reshaping Migrant-Native Health Disparities: evidence from the hukou reform in China," World Development, Elsevier, vol. 195(C).
    5. Yang Yang, 2023. "Hukou Identity and Economic Behaviours: A Social Identity Perspective," Erudite Ph.D Dissertations, Erudite, number ph23-02 edited by Catherine Bros & Julie Lochard, December.
    6. Jie Chen & Wei Wang & Yan Song, 2023. "Economic Potential Gain, Income Uncertainty, and Rural Migrants’ Urban Homeownership: Evidence from China," Sustainability, MDPI, vol. 15(9), pages 1-22, April.
    7. Li, Bingjing & Ma, Lin, 2022. "JUE insight: Migration, transportation infrastructure, and the spatial transmission of COVID-19 in China," Journal of Urban Economics, Elsevier, vol. 127(C).

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