Migration Externalities in Chinese Cities

33 Pages Posted: 30 Mar 2015

See all articles by Pierre-Philippe Combes

Pierre-Philippe Combes

Université de Lyon; Sciences Po - Department of Economics; Centre for Economic Policy Research (CEPR)

Sylvie Démurger

University of Lyon 2 - Groupe d'Analyse et de Théorie Economique (GATE)

Li Shi

Chinese Academy of Social Sciences (CASS) - Institute of Economics; IZA Institute of Labor Economics

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Abstract

We analyse the impact of internal migration in China on natives' labour market outcomes. We find evidence of a large positive correlation of the city share of migrants with natives' wages. Using different sets of control variables and instruments suggests that the effect is causal. The large total migrant impact (+10% when one moves from the first to the third quartile of the migrant variable distribution) arises from gains due to complementarity with natives in the production function (+6.4%), and from gains due to agglomeration economies (+3.3%). Finally, we find some evidence of a stronger effect for skilled natives than for unskilled, as expected from theory. Overall, our findings support large nominal wage gains that can be expected from further migration and urbanisation in China.

Keywords: migration, urban development, agglomeration economies, wage disparities, China

JEL Classification: O18, J61, R23, J31, O53

Suggested Citation

Combes, Pierre-Philippe and Démurger, Sylvie and Shi, Li, Migration Externalities in Chinese Cities. IZA Discussion Paper No. 8923, Available at SSRN: https://ssrn.com/abstract=2586426

Pierre-Philippe Combes (Contact Author)

Université de Lyon ( email )

92 Rue Pasteur
Lyon, 69007
France

Sciences Po - Department of Economics ( email )

28, rue des Saints peres
Paris, 75007
France

HOME PAGE: http://https://www.gate.cnrs.fr/ppcombes

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Sylvie Démurger

University of Lyon 2 - Groupe d'Analyse et de Théorie Economique (GATE) ( email )

93, chemin des Mouilles
Ecully, 69130
France
(33 4) 72 86 61 05 (Phone)
(33 4) 72 86 60 90 (Fax)

HOME PAGE: http://www.gate.cnrs.fr/spip.php?article22

Li Shi

Chinese Academy of Social Sciences (CASS) - Institute of Economics ( email )

2 Yuetan Beixiaojie
Beijing
+86 1 068032473 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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