China's mobility barriers and employment allocations
L. Rachel Ngai,
Christopher Pissarides and
LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library
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 rental market; mobility barriers; 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-cna, nep-lab, nep-tra and nep-ure
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