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Migration and Spatial Misallocation in China

Author

Listed:
  • Li, Xiaolu

    (Nanjing University of Posts and Telecommunications)

  • Ma, Lin

    (Singapore Management University)

  • Tang, Yang

    (Nanyang Technological University)

Abstract

We structurally estimate the firm-level frictions across prefectures in China and quantify their aggregate and distributional implications. Based on a general equi-librium model with input and output distortions and migration, we show that the firm-level frictions are less dispersed and less correlated with productivity in richer prefectures. Counterfactual exercises show that reducing the within-prefecture mis-allocation increases the aggregate welfare, discourages migration towards large cities, and narrows the spatial inequality. Moreover, internal migration alleviates the impacts of micro-frictions on aggregate welfare and worsens their impacts on spatial inequality.

Suggested Citation

  • Li, Xiaolu & Ma, Lin & Tang, Yang, 2021. "Migration and Spatial Misallocation in China," Economics and Statistics Working Papers 9-2021, Singapore Management University, School of Economics.
    • Handle: RePEc:ris:smuesw:2021_009
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    Cited by:

    1. Min Fang & Libin Han & Zibin Huang & Ming Lu & Li Zhang, 2022. "Place-based Land Policy and Spatial Misallocation: Theory and Evidence from China," Working Papers 002002, University of Florida, Department of Economics.
    2. Mbiba, Beacon & Mupfumira, Daisy, 2022. "Rising to the occasion: Diaspora remittances to Zimbabwe during the COVID-19 pandemic," World Development Perspectives, Elsevier, vol. 27(C).

    More about this item

    Keywords

    misallocation; regional trade; economic geography; welfare gain;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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