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Title:Relaxing Hukou: Increased labor mobility and China's economic geography PDF Logo
Authors:Bosker, Maarten
Brakman, Steven
Garretsen, Harry
Schramm, Marc
Issue Date:2010
Series/Report no.:CESifo working paper: Empirical and Theoretical Methods 3271
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.
Subjects:Empirical and Theoretical Methods
JEL:O18
R11
R12
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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