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Title: China's mobility barriers and employment allocations

Author(s): Liwa Rachel Ngai, Christopher Pissarides and Jin Wang

Publication Date: November 2016

Keyword(s): China hukou, employment allocations, land policy, mobility barriers and social subsidies

Programme Area(s): Development Economics and Macroeconomics and Growth

Abstract: China?s hukou system imposes two main barriers to population movements. Agricultural workers get land to cultivate but run the risk of losing it if they migrate. Social transfers (education, health, etc.) are conditional on holding a local hukou. We show that the land policy is a more important barrier on industrialization. This distortion can be corrected by giving property rights to farmers. Social transfers dampen mainly urbanization. We calculate that the two policies together lead to overemployment in agriculture of 6.7 points, under-employment in the urban sector of 6.3 points and have practically no impact on the rural non-agricultural sector.

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Bibliographic Reference

Ngai, L, Pissarides, C and Wang, J. 2016. 'China's mobility barriers and employment allocations'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=11657