Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Download NBER WORKING PAPER SERIES HOW MIGRATION RESTRICTIONS LIMIT Chun-Chung Au
Document related concepts
Transcript
NBER WORKING PAPER SERIES HOW MIGRATION RESTRICTIONS LIMIT AGGLOMERATION AND PRODUCTIVITY IN CHINA Chun-Chung Au Vernon Henderson Working Paper 8707 http://www.nber.org/papers/w8707 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 January 2002 We gratefully acknowledge support for this work from a grant from the Research Committee of the World Bank and by a Mellon Foundation grant to the Population Studies and Training Center at Brown University. The opinions expressed in the paper do not necessarily represent those of these organizations. Remy Prud’homme provided early inspiration and insight in formulating some of the issues in the paper. The views expressed herein are those of the authors and not necessarily those of the National Bureau of Economic Research. © 2002 by Chun-Chung Au and Vernon Henderson. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. How Migration Restrictions Limit Agglomeration and Productivity in China Chun-Chung Au and Vernon Henderson NBER Working Paper No. 8707 January 2002 JEL No. J600, O100, O400, P200, R100, R200, R300 ABSTRACT China strongly restricts rural-rural, urban-urban, and rural-urban migration. The result which this paper documents is a surplus of labor in agriculture. However, the paper argues that these restrictions also lead to insufficient agglomeration of economic activity within both rural industrial and urban areas, with resulting first order losses in GDP. For urban areas the paper estimates a city productivity relationship, based on city GDP numbers for 1990-97. The effects of access, educational attainment, FDI, and public infrastructure on productivity are estimated. Worker productivity is shown to be an inverted U-shape function of city employment level, with the peak point shifting out as industrial composition moves from manufacturing to services. As far as we know this is the first paper to actually estimate the relationship between output per worker and city scale, as it varies with industrial composition. The majority of Chinese cities are shown to be potentially undersized - below the lower bound on the 95% confidence interval about the size where their output per worker peaks. The paper calculates the large gains from increased agglomeration in both the rural industrial and urban sectors. It also examines the effect of capital reallocations, where the rural sector is grossly undercapitalized. Chun-Chung Au Brown University Vernon Henderson Department of Economics Box B Brown University Providence, RI 02912 and NBER [email protected]
