Ha, Wei and Yi, Junjian and Zhang, Junsen (2009): Internal Migration and Income Inequality in China: Evidence from Village Panel Data.
Download (608kB) | Preview
Existing studies on the impact of migration on income inequality at sending communities suffer from severe methodology defects and data limitations. This paper analyzes the impact of rural-to-urban migration on inequality using a newly constructed panel dataset for around 100 villages over a ten-year period from 1997 to 2006 in China. To our best knowledge, this is the first paper that examines the dynamic aspects of migration and income inequality employing a dynamic panel data analysis. Unlike earlier studies focusing exclusively on remittances, our data include the total labor earnings of migrants in destination areas. Furthermore, we look at the gender dimension of the impact of migration on wage inequality within the sending communities.
Since income inequality is time-persisting, we use a system GMM framework to control for the lagged income inequality in estimating the effect of emigration on income inequality in the sending villages. At the same time, contemporary emigration is validly instrumented in the GMM framework because of the unobserved time-varying community shock that correlates with emigration and income inequality, as well as with the potential reverse causality from income inequality to emigration. We found a Kuznets (inverse U-shaped) pattern between migration and income inequality in the sending communities. Specifically, contemporary emigration increases income inequality, while lagged emigration has strong income inequality-reducing effect in the sending villages. A 50-percent increase in the lagged emigration rate translates into one-sixth to one-seventh standard deviation reduction in inequality. Contemporary emigration has slightly smaller effects in raising the income inequality within villages. These effects are robust to the different specifications and different measures of inequality. More interestingly, the estimated relationship between emigration and the gender wage gap also has an inverse U-shaped pattern. Emigration tends to increase the gender wage gap initially, and then tends to decrease it in the sending villages.
|Item Type:||MPRA Paper|
|Original Title:||Internal Migration and Income Inequality in China: Evidence from Village Panel Data|
|Keywords:||Internal Migration; Inequality; System GMM.|
|Subjects:||D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O15 - Human Resources; Human Development; Income Distribution; Migration
J - Labor and Demographic Economics > J6 - Mobility, Unemployment, and Vacancies > J61 - Geographic Labor Mobility; Immigrant Workers
C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models; Multiple Variables > C33 - Models with Panel Data; Longitudinal Data; Spatial Time Series
|Depositing User:||Wei Ha|
|Date Deposited:||22. Aug 2009 19:16|
|Last Modified:||12. Feb 2013 03:44|
Adams, R. H. "The Economic and Demographic Determinants of International Migration in Rural Egypt." Journal of Development Studies, 1993, 30(1), pp. 146-67.
____. "Remittances, Investment, and Rural Asset Accumulation in Pakistan." Economic Development and Cultural Change, 1998, 47(1), pp. 155-73.
Arellano, M. and Bond, S. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations." The Review of Economic Studies, 1991, pp. 277-97.
Banerjee, A. V. and Duflo, E. "Inequality and Growth: What Can the Data Say?" Journal of Economic Growth, 2003, 8(3), pp. 267-99.
Benjamin, D.; Brandt, L. and Giles, J. "The Evolution of Income Inequality in Rural China." Economic Development and Cultural Change, 2005, 53(4), pp. 769-824.
Black, R.; Natali, C. and Skinner, J. "Migration and Inequality." Background paper for World Development Report 2006, 2005.
Blundell, R. and Bond, S. "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models." Journal of Econometrics, 1998, 87(1), pp. 115-43.
Cai, Fang; Du, Yang and Wang, Meiyan. "Migration and Labor Mobility in China." Background paper for Human Development Report 2009, 2009.
Cai, Fang and Wang, Dewen. "Impacts of Internal Migration on Economic Growth and Urban Development in China," J. DeWind and J. Holdaway, Migration and Development within and across Borders: Research and Policy Perspectives on Internal and International Migration. International Organization for Migration and The Social Science Research Council, 2008.
Card, David. "Immigration and Inequality." NBER Working Paper No. 14683, 2009.
Chan, K. W. and Buckingham, W. "Is China Abolishing the Hukou System?" The China Quarterly, 2008, 195, pp. 582-606.
de Brauw, A. and Giles, J. "Migrant Labor Markets and the Welfare of Rural Households in the Developing World Evidence from China." World Bank Policy Research Working Paper. 4585, 2008a.
____. "Migrant Opportunity and the Educational Attainment of Youth in Rural China " World Bank Policy Research Working Paper 4526, 2008b.
de Haas, H. "Migration and Development: A Theoretical Perspective." Paper delivered at Transnationalisation and Development (s): Towards a North-South Perspective. Zentrum für Interdisziplinäre Forschung, Bielefeld University, May, 2007, 31.
Deaton, A. The Analysis of Household Surveys. Johns Hopkins Univ. Press, 1997.
Du, Yang; Park, Albert and Wang, Sangui. "Migration and Rural Poverty in China " Journal of Comparative Economics, 2005, 33(4), pp. 688-709.
Fan, Cindy. "Migration, Hukou, and the City," S. Yusuf and T. Saich, China Urbanizes: Consequences, Strategies, and Policies. World Bank Publications, 2008.
Fan, Cindy and Sun, Mingjie. "China’s Permanent and Temporary Migrants: Differentials and Changes, 1990-2000." forthcoming.
Forbes, K. J. "A Reassessment of the Relationship between Inequality and Growth." American Economic Review, 2000, 90(4), pp. 869-87.
Goldin, C. D. and Katz, L. F. The Race between Education and Technology. Belknap Press of Harvard University Press, 2008.
Gustafsson, B.; Li, S. and Sicular, T. Inequality and Public Policy in China. Cambridge University Press, 2008.
Harris, J. R. and Todaro, M. P. "Migration, Unemployment and Development: A Two-Sector Analysis." The American Economic Review, 1970, 60(1), pp. 126-42.
Hayashi, F. Econometrics. Princeton: Princeton University Press, 2000.
Huang, Quanquan. "Three Government Agencies Emphasize the Need to Pay Close Attention to the Safety and Health of Migrat Workers (Sanbumen Kaizhan Guanai Nongmingong Shengming Anquan Yu Jiankang Tebie Xingdong)." Xinhua News Agency. 2006.
Lewis, W. A. "Economic Development with Unlimited Supplies of Labour." The Manchester School, 1954, 22(2), pp. 139-91.
Li, Qiang; Mao, Xuefeng and Zhang, Tao. "Migrant Worker's Remittances: Quantity and Usage (Nongmingong Huikuan De Juece Shuliang Yu Yongtu) " China Rural Observer (Zhongguo Nongcun Guancha), 2008, 3, pp. 2-12.
Lipton, M. "Migration from Rural Areas of Poor Countries: The Impact on Rural Productivity and Income Distribution." World Development, 1980, 8(3), pp. 273-73.
Lu, Xianghu and Wang, Yonggang. "Rural Urban Migration in China: Estimation and Analysis (Zhongguo Chengxiang Renkou Qianyi Guimo De Cesuan Yu Fenxi)." Northwest Population (Xibei Renkou), 2006, 1, pp. 14-16.
McKenzie, David and Rapoport, Hillel. "Network Effects and the Dynamics of Migration and Inequality: Theory and Evidence from Mexico." Journal of Development Economics, 2007, 84(1), pp. 1-24.
Meng, X. and Zhang, J. "The Two-Tier Labor Market in Urban China Occupational Segregation and Wage Differentials between Urban Residents and Rural Migrants in Shanghai." Journal of Comparative Economics, 2001, 29(3), pp. 485-504.
Murphy, R. How Migrant Labor Is Changing Rural China. Cambridge University Press, 2002.
____. "Migration and Inter-Household Inequality: Observations from Wanzai County, Jiangxi." China Quarterly, 2000, (164), pp. 965-82.
Pritchett, L. Let Their People Come: Breaking the Gridlock on International Labor Mobility. Ctr for Global Development, 2006.
Rapoport, Hillel and Docquier, Frédéric. The Economics of Migrants' Remittances. SSRN, 2005.
Ray, D. Development Economics. Princeton University Press Princeton, NJ, 1998.
Song, Hongyuan and Bai, Nansheng. Stay or Return: Return Migration of Chinese Migrant Workers (Huixiang or Jincheng: Zhongguo Nongcun Waichu Laodongli Huiliu Yanjiu). Beijing: China Fiscal Economics Publishing House (Zhongguo Caizheng Jingji Chubaishe), 2002.
Stark, O. and Taylor, J. E. "Migration Incentives, Migration Types: The Role of Relative Deprivation." The Economic Journal, 1991, 101(408), pp. 1163-78.
Stark, O.; Taylor, J. E. and Yitzhaki, S. "Migration, Remittances and Inequality - a Sensitivity Analysis Using the Extended Gini Index." Journal of Development Economics, 1988, 28(3), pp. 309-22.
Stark, Oded and Bloom, David E. "The New Economics of Labor Migration." The American Economic Review, 1985, 75(2), pp. 173-78.
Workers, Research team on the Issue of Chinese Farmer-turned. "Report on the Problems of Chinese Farmer-Turned Workers (Zhongguo Nongmingong Wenti Yanjiu Zongbaogao)." Reform (Gaige), 2006, 5.
Xiang, Biao. "How Far Are the Left-Behind Left Behind? A Preliminary Study in Rural China." Center on Migration, Policy and Society, University of Oxford, Working Paper No.12, 2005.
Xu, Zengyang and Huang, Huixiang. "Survey on the Political Participation of Migrant Workers in Wuhan City." Strategy and Management (Zhanlue yu Guanli), 2002, 6.
Zhu, Nong and Luo, Xuebei. "The Impact of Remittance on Rural Poverty and Inequality in China." World Bank Policy Research Working Paper. 4637, 2008.