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Migration constraints and development: Hukou and capital accumulation in China

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  • Thomas Vendryes

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, ENS Cachan - École normale supérieure - Cachan, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

Abstract

Rural-urban migration flows are a crucial corollary of economic development. The adverse or beneficial effects of internal migration, for sending as well as receiving areas, and the definition of optimal migration policies, have remained much discussed issues since the seminal works of Harris and Todaro (1970). This debate is especially acute in China where the "household registration system" (hukou) acts as a strong constraint on individual migration. This paper aims to assess the consequences of hukou through a simple model of a developing dual economy with overlapping generations. Contrary to existing studies focused on the contemporaneous allocation of economic resources, it deals with the dynamic consequences of migration flows and migration policies. It shows that, in fairly general circumstances, hukou-related migration constraints can actually hasten development, understood as the transfer of the labor force to the modern sector, driven by capital accumulation. The hukou system could thus be one of the causes of the extremely high Chinese saving rate and of the high pace of Chinese development. Insights from the model are confronted with stylized facts from the Chinese development, and theoretical results are especially consistent with the effects of the 2001 "towns and small cities" reform.

Suggested Citation

  • Thomas Vendryes, 2011. "Migration constraints and development: Hukou and capital accumulation in China," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00783794, HAL.
    • Handle: RePEc:hal:cesptp:hal-00783794
    DOI: 10.1016/j.chieco.2011.08.006
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    14. Rong Cui & Jeffrey H. Cohen, 2015. "Reform and the HuKou System in China," Migration Letters, Migration Letters, vol. 12(3), pages 327-335, September.
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