Migration constraints and development: Hukou and capital accumulation in China

Thomas Vendryes

China Economic Review, 2011, vol. 22, issue 4, 669-692

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.

Keywords: Migration; Migration policies; Dual economy; Chinese economy; Hukou (search for similar items in EconPapers)
JEL-codes: J61 O15 O24 O41 R11 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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Working Paper: Migration constraints and development: Hukou and capital accumulation in China (2011)
Working Paper: Migration constraints and development: Hukou and capital accumulation in China (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:22:y:2011:i:4:p:669-692

DOI: 10.1016/j.chieco.2011.08.006

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