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Trade, Migration and Productivity: A Quantitative Analysis of China

Listed author(s):
  • Trevor Tombe
  • Xiaodong Zhu

We study how misallocation due to goods- and labour-market frictions affect aggregate productivity in China. Combining unique data with a general equilibrium model of internal and international trade, and migration across regions and sectors, we quantify the magnitude and consequences of trade and migration costs. The costs were high in 2000, but declined afterward. The decline accounts for roughly two-fifths of aggregate labour productivity growth in China between 2000 and 2005. Reductions in internal rather than international costs are particularly important. Despite the decline, migration costs are still high and potential gains from further reform are large.

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File URL: https://www.economics.utoronto.ca/public/workingPapers/tecipa-542.pdf
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Paper provided by University of Toronto, Department of Economics in its series Working Papers with number tecipa-542.

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Length: Unknown pages
Date of creation: 20 Jun 2015
Handle: RePEc:tor:tecipa:tecipa-542
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  1. Pierre-Daniel G. Sarte & Esteban Rossi-Hansberg & Fernando Parro & Lorenzo Caliendo, 2013. "The impact of regional and sectoral productivity changes on the U.S. economy," Working Paper 13-14, Federal Reserve Bank of Richmond.
  2. Lin, Justin Y & Wang, Gewei & Zhao, Yaohui, 2004. "Regional Inequality and Labor Transfers in China," Economic Development and Cultural Change, University of Chicago Press, vol. 52(3), pages 587-603, April.
  3. Dennis Novy, 2013. "Gravity Redux: Measuring International Trade Costs With Panel Data," Economic Inquiry, Western Economic Association International, vol. 51(1), pages 101-121, 01.
  4. Treb Allen & Costas Arkolakis, 2014. "Trade and the Topography of the Spatial Economy," The Quarterly Journal of Economics, Oxford University Press, vol. 129(3), pages 1085-1140.
  5. Fernando Parro, 2013. "Capital-Skill Complementarity and the Skill Premium in a Quantitative Model of Trade," American Economic Journal: Macroeconomics, American Economic Association, vol. 5(2), pages 72-117, April.
  6. Lukas Albrecht & Trevor Tombe, 2016. "Internal trade, productivity and interconnected industries: A quantitative analysis," Canadian Journal of Economics, Canadian Economics Association, vol. 49(1), pages 237-263, February.
  7. Lorenzo Caliendo & Maximiliano Dvorkin & Fernando Parro, 2015. "The Impact of Trade on Labor Market Dynamics," NBER Working Papers 21149, National Bureau of Economic Research, Inc.
  8. Trevor Tombe, 2015. "The Missing Food Problem: Trade, Agriculture, and International Productivity Differences," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(3), pages 226-258, July.
  9. Aguayo-Téllez, Ernesto & Muendler, Marc-Andreas & Poole, Jennifer P., 2010. "Globalization and Formal Sector Migration in Brazil," World Development, Elsevier, vol. 38(6), pages 840-856, June.
  10. Guido Matias Cortes & Giovanni Gallipoli, 2014. "The Costs of Occupational Mobility: An Aggregate Analysis," Working Papers 2014-015, Human Capital and Economic Opportunity Working Group.
  11. Brian McCaig & Nina Pavcnik, 2014. "Export Markets and Labor Allocation in a Low-income Country," NBER Working Papers 20455, National Bureau of Economic Research, Inc.
  12. Ejaz Ghani & Arti Grover Goswami & William R. Kerr, 2016. "Highway to Success: The Impact of the Golden Quadrilateral Project for the Location and Performance of Indian Manufacturing," Economic Journal, Royal Economic Society, vol. 126(591), pages 317-357, 03.
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