Urbanization policy and economic development: A quantitative analysis of China's differential Hukou reforms

• Main Authors: HSU, Wen-Tai, MA, Lin
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2020
• Subjects: Hukou system; household registration system; differential reform; urbanization policy; economic development; spatial quantitative analysis; Asian Studies; Growth and Development; Regional Economics; Urban Studies and Planning
• Online Access: https://ink.library.smu.edu.sg/soe_research/2366; https://ink.library.smu.edu.sg/context/soe_research/article/3365/viewcontent/revised_paper_.pdf
• Institution: Singapore Management University

The household registration system (hukou system) in China has hampered rural-urban migration by posing large migration friction. The system has been gradually relaxed in the past few decades, but the reforms have been differential in city size and by the coastal-inland divide. We find a striking contrast in the migration patterns between years 2005 and 2015; rural people tended to move more to the coastal urban region in 2005, but more to the inland urban region in 2015. We calibrate a spatial quantitative model to the world economy in both years with China being divided into the rural, coastal urban, and inland urban regions. We find that alternative urbanization policies that are not differential and that are more laissez-faire would substantially improve national welfare, in magnitudes that are comparable to the welfare gains from the trade liberalization that China has put in place in the past.