Do Rural Migrants Benefit from Labor Market Agglomeration Economies? Evidence from Chinese Cities

Abstract

We combine the 2005 China Inter-Census Population Survey data and the 2004 ChinaManufacturing Census to test whether workers, particularly rural migrants, benefit from labor market Marshallian externalities. We find that workers in general, and rural migrants in particular, benefit from labor market pooling effect (measured by total employment in a cityindustry cell) and human capital externalities (measured by share of workers with a college degree or above in a city-industry cell). These findings are robust to various sorting bias tests. However, rural migrants benefit much less than do local or urban workers, possibly because rural migrants lack social networks and are discriminated doubly in terms of being both "rural" and "migrants." Our findings have policy implications on how Chinese cities can become skilled during the rapid urbanization process coupled with global competition.

Legal land transfer rights, labor migration and urban–rural income disparity: Evidence from the implementation of China's Rural Land Contracting Law in 2003

“…Therefore, migrant farmers' opportunity costs are reduced, and they can work and live in cities with equanimity, realizing the full migration of labor (Fergusson, 2013). As the rural labor continues to fully migrate from the agriculture sector with low marginal labor productivity to the urban nonagricultural sector, the two sectors' marginal labor productivity eventually becomes equal, thus reducing the urban‐rural income disparity and promoting urban‐rural integrated development (Harris & Todaro, 1970; Yang et al., 2020). It can be seen that the legal land transfer rights affect income distribution, which can help reduce the income disparity between urban and rural areas.…”

Can the urban spatial structure accelerate urban employment growth? Evidence from China

“…Agglomeration can endow a city with a high ability to create jobs because of its positive effects on productivity (Ciccone & Hall, 1996;Combes et al, 2012;Combes & Gobillon, 2015;Li et al, 2012;Lucas, 2004;Rosenthal & Strange, 2004;Zhang et al, 2017). For example, rural migrants can benefit from urban agglomeration economies through formal or informal social interactions such as meetings, peer effects, imitation, and social networking (Yang et al, 2017). Agglomeration also leads to some diseconomies, such as higher living costs, congestion, pollution, crime, and poverty (Glaeser, 1998), suggesting that agglomeration may decrease the attractiveness of a city to agricultural laborers and decelerate urban employment growth.…”

Human capital agglomeration, institutional barriers, and internal migration in China

“…In addition, the level of human capital is highly unevenly distributed within China (Fleisher et al., 2010). Therefore, several recent studies have investigated the presence of human capital externalities in urban China, mostly from the perspectives of employment, wages, and firm performance (Glaeser & Lu, 2018; Liang & Lu, 2019; Liu, 2007, 2014; Yang et al., 2020). 2…”