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 2021
• 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/2506; https://ink.library.smu.edu.sg/context/soe_research/article/3505/viewcontent/urbanization_policy_and_china_s_economic_development_combine.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. We find a striking contrast in migration patterns between years 2005 and 2015; rural people tended to move more to large cities in 2005, but more to small- and medium-sized cities in 2015. We calibrate a spatial quantitative model to the world economy in both years with China divided into rural, mega-city, and other-city regions. We find that alternative urbanization policies that are not differential and that are more laissez-faire 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.