The impact of China's hukou restrictions on the aggregate national saving

Adolfo, Cristobal Campoamor (2014): The impact of China's hukou restrictions on the aggregate national saving.

Abstract

This paper presents a model accounting for the impact of the Chinese rural-urban migration on the stock of aggregate saving and the skill composition of the urban labor force. The novel mechanism through which immigration affects labor-market outcomes is the availability of new loanable funds for investment, which also results in endogenous skill upgrading. Given their rural hukou, which determines their higher training costs in the city, migrants skip the financial costs of human capital or residential investment. As a result, they self select as net lenders, which reduces the equilibrium local interest rates and facilitates the investment mostly of new generations of urbanites. Consequently, the aggregate labor income of people with urban hukou increases with immigration.

• Item Type: MPRA Paper
• Language: English
• Keywords: Rural-to-Urban Migration; hukou; human capital; saving rate
• Subjects: J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J61 - Geographic Labor Mobility ; Immigrant Workers; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O15 - Human Resources ; Human Development ; Income Distribution ; Migration; P - Economic Systems > P3 - Socialist Institutions and Their Transitions > P35 - Public Economics

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