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Relaxing Hukou: Increased labor mobility and China?s Economic Geography

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  • Garretsen, Harry
  • Brakman, Steven
  • Bosker, Maarten
  • Schramm, Marc

Abstract

China?s Hukou system poses severe restrictions on labor mobility. This paper assesses the consequences of relaxing these restrictions for China?s internal economic geography. We base our analysis on a new economic geography model. First, we obtain estimates of the important model parameters on the basis of information on 264 of China?s prefecture cities over the period 1999-2005. Second, and by using our estimation results as input, we simulate various long-run scenarios of China?s internal economic geography that differ in their degree of interregional labor mobility. We find that increased labor mobility will lead to more pronounced core-periphery outcomes. Interestingly, these agglomerations are not necessarily along the coastal regions. Given the increased importance of China?s internal market, firms agglomerate in the populous heartland of China. China?s internal demand will be the most important determinant of its future economic geography.

Suggested Citation

  • Garretsen, Harry & Brakman, Steven & Bosker, Maarten & Schramm, Marc, 2010. "Relaxing Hukou: Increased labor mobility and China?s Economic Geography," CEPR Discussion Papers 8106, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:8106
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    More about this item

    Keywords

    China; Economic geography; Labor mobility;
    All these keywords.

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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