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China’s Mobility Barriers and Employment Allocations

L. Rachel Ngai (), Christopher Pissarides () and Jin Wang ()
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Jin Wang: Hong Kong University of Science and Technology

No 1811, Discussion Papers from Centre for Macroeconomics (CFM)

Abstract: China's hukou system imposes two main barriers to population movements. Agricultural workers get land to cultivate but are unable to trade it in a frictionless market. Social transfers (education, health, etc.) are conditional on holding a local hukou. We show that the land policy leads to over-employment in agriculture and it is the more important barrier to industrialization. Effective land tenure guarantees and a perfect competitive rental market would correct this inefficiency. The local restrictions on social transfers favour rural enterprises over urban employment with a relatively smaller impact on industrialization.

Keywords: Chinese immigration; Chinese land policy; Imperfect rent; Hukou registration; Social transfers (search for similar items in EconPapers)
JEL-codes: J61 O18 R23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr, nep-lab, nep-tra and nep-ure
Date: 2018-03
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