Institutional Permeability and Selective Migration: Dual Mechanisms of Wage Premium Formation in China’s Urbanization Process

Siyan Liu ()
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Siyan Liu: Southwestern University of Finance and Economics, School of Economics

A chapter in Proceedings of the 2025 International Conference on Financial Innovation and Marketing Management (FIMM 2025), 2025, pp 1010-1022 from Springer

Abstract: Abstract The economic dividends of population agglomeration in China increasingly depend on the coordination of institutional environments. This paper explores how agglomeration effects and institutional environments shape the economic benefits of population agglomeration, based on case studies of Beijing, Chengdu, and Nanyang. Despite extensive studies on agglomeration economies, how institutions modulate this process remains understudied. They respectively represent cities with high institutional barriers, strong institutional flexibility, and weak absorptive capacity, revealing their differing responses to population inflows and outflows. The study shows that the institutional arrangement plays an essential role in the transformation mechanism of the agglomeration effect. In institutionally exclusive environments, even strong agglomeration advantages fail to attract talent effectively. In contrast, cities with more inclusive institutions can retain talent through adaptive policies, while smaller cities, constrained by limited industrial structures and low-quality jobs, undermine the effectiveness of return migration policies. Mechanistically, institutional recognition and skill certification mediate labor mobility efficiency, while service provision moderates wage premium realization. Therefore, it is necessary to promote context-specific institutional reforms by providing differentiated support in terms of institutional recognition, skill certification, and service provision, so as to eliminate structural barriers to labor mobility and wage premium realization. This study enhances the understanding of population agglomeration mechanisms and provides valuable insights for promoting regional coordination and refining talent policy.

Keywords: Population Agglomeration; Institutional Barriers; Wage Premium; Urban Comparison; Regional Development (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-874-5_117

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DOI: 10.2991/978-94-6463-874-5_117

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