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Geography, trade, and internal migration in China

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  • Ma, Lin
  • Tang, Yang

Abstract

This paper quantitatively studies the local welfare impacts of inter-city migration in China. We structurally estimate a trade model with endogenous migration decisions using data from 279 prefecture-level cities. The results suggest that inflows of migrant workers increase welfare in the destination cities between 2000 and 2005 despite their negative impacts on congestion and nominal wage. The positive local impacts of migration depend crucially on the endogenous firm entry. The positive impacts in the destination cities also spill over to the neighboring cities through inter-city trade, often leading to higher welfare gains in the nearby cities than the destination cities themselves. We also show that further relaxing the Hukou restrictions in the largest Chinese cities is welfare-improving to the local residents.

Suggested Citation

  • Ma, Lin & Tang, Yang, 2020. "Geography, trade, and internal migration in China," Journal of Urban Economics, Elsevier, vol. 115(C).
    • Handle: RePEc:eee:juecon:v:115:y:2020:i:c:s0094119019300506
    DOI: 10.1016/j.jue.2019.06.004
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    More about this item

    Keywords

    Regional trade; Migration; Welfare; Economic geography;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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