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Inequality and Internal Migration in China: Evidence from Village Panel Data

Wei Ha, Junjian Yi () and Junsen Zhang

No HDRP-2009-27, Human Development Research Papers (2009 to present) from Human Development Report Office (HDRO), United Nations Development Programme (UNDP)

Abstract: This paper analyzes the impact of rural-to-urban migration on income inequality and gender wage gap in source regions using a newly constructed panel dataset for around 100 villages over a ten-year period from 1997 to 2006 in China. Since income inequality is time-persisting, we use a system GMM framework to control for the lagged income inequality, in which contemporary emigration is also validly instrumented. We found a Kuznets (inverse U-shaped) pattern between migration and income inequality in the sending communities. Specifically, contemporary emigration increases income inequality, while lagged emigration has strong income inequalityreducing effect in the sending villages. A 50-percent increase in the lagged emigration rate translates into one-sixth to one-seventh standard deviation reduction in inequality. These effects are robust to the different specifications and different measures of inequality. More interestingly, the estimated relationship between emigration and the gender wage gap also has an inverse Ushaped pattern. Emigration tends to increase the gender wage gap initially, and then tends to decrease it in the sending villages.

Keywords: Internal Migration; Inequality; System GMM (search for similar items in EconPapers)
JEL-codes: O15 J61 D31 C33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cna, nep-dev and nep-mig
Date: 2009-07, Revised 2009-07
References: View references in EconPapers View complete reference list from CitEc
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Published as background research for the 2009 Human Development Report.

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