Fiscal Decentralization, Rural Industrialization, and Undocumented Labor Mobility in Rural China (1982-87)

Yiu Por (Vincent) Chen ()

No 9024, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper explores the relationship between fiscal decentralization, which gave greater rural industrialization and fiscal authority to local governments, and the emergence of rural-rural undocumented inter-provincial labor migration during China's initial reform period. A Heckman model is employed to correct for the zero observation problems and to consistently estimate the labor mobility with a modified gravity equation. Given the institutional barriers, the fiscal decentralization has two contending effects on labor market integration: Local economic development promotes labor mobility, but local public goods crowding restrains the inflow of labor at the destination. The crowding effect is stronger at lower levels of government.

Keywords: local public goods; local economic development; fiscal decentralization; rural labor mobility (search for similar items in EconPapers)
JEL-codes: D72 H30 J61 J68 (search for similar items in EconPapers)
Pages: 70 pages
Date: 2015-04
New Economics Papers: this item is included in nep-cna, nep-lab, nep-mig, nep-tra and nep-ure
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Published - published in: Regional Studies, 2016, 50 (9), 1469-1482

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