Migration Externalities in China

Pierre-Philippe Combes (1, 2, 3) , Sylvie Démurger (4, 5) , Shi Li (5, 6)

1 CEPR - Center for Economic Policy Research
2 AMSE - Aix-Marseille Sciences Economiques
3 ECON - Département d'économie (Sciences Po)
4 GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne
5 IZA - Forschungsinstitut zur Zukunft der Arbeit - Institute of Labor Economics
6 BNU - Beijing Normal University

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.

Mots clés: China; Wage disparities; Agglomeration economies; Urban development; Migration; Urban Development; Agglomeration Economies; Wage Disparities

Domaines: Economies et finances

Pierre-Philippe Combes, Sylvie Démurger, Shi Li. Migration Externalities in China. European Economic Review, 2015, 76, pp.152 - 167. ⟨10.1016/j.euroecorev.2015.02.004⟩. ⟨halshs-01137798⟩