The Welfare Magnet Hypothesis in a Developing Country: Evidence from a Hukou Reform in China

Abstract

This study examines the impact of welfare benefits on internal migration by exploiting variations in the timing and intensity of exposure to a hukou reform across 283 Chinese cities from 2002 to 2015. Using population censuses and data we collected on the adoption of the hukou reform, we find that improved access to welfare benefits substantially increases migration. The impact is more pronounced for young and low- and medium-skilled workers. And it persists over the long term. These findings demonstrate the existence of sizable welfare magnet effects for internal migration in China. Underlying mechanisms and competing hypotheses are also analyzed.

Keywords: welfare magnet hypothesis, internal migration, China.

JEL Classification: H31; J61; O15; F66