SMU SOE Seminar (November 16, 2022): Migration Costs, Sorting, and the Agricultural Productivity Gap

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ABSTRACT We use a unique panel dataset and a policy experiment as an instrument to estimate the impact of policy-induced migration cost reductions on rural-urban migration and the associated increase in labor earnings for migrant workers in China. Our estimation shows that the observed labor earnings gap between agriculture and non-agriculture is mainly due to large migration costs and a large underlying productivity difference between the two sectors. Sorting plays only a minor role in accounting for the observed sectoral earnings gap. We also structurally estimate a general equilibrium Roy model to quantify the effects of reducing migration costs. A policy reform that sets the hukou liberalization index in all regions of China to the level of the most liberal region would reduce the observed agricultural productivity gap by 23%, increase the migrant share by 6%, and increase the aggregate productivity by 2%. Click here to view the CV.
		PRESENTER Naijia Guo The Chinese University of Hong Kong
		RESEARCH FIELDS Labor Economics Family Economics
		DATE: 16 November 2022 (Wednesday)
		TIME: 4pm - 5.30pm
		VENUE: Meeting Room 5.1, Level 5 School of Economics Singapore Management University 90 Stamford Road Singapore 178903