Rural-Urban Migration, Substitutability of Human Capital and City Productivity: Evidence from China

17 Pages Posted: 24 Aug 2014 Last revised: 7 Dec 2014

See all articles by Jixiang Yu

Jixiang Yu

Anhui Science and Technology University

Kunrong Shen

Nanjing University - Department of Economics

Desu Liu

Nanjing University - School of Business, Department of Finance and Insurance

Date Written: December 7, 2014

Abstract

Among the studies on the productivity effect of migration, the role of the substitutability of human capital between migrant workers and local workers has not received much discussion. The elasticity of substitution is important for rural-urban migration in China, because there is substantial difference in schooling quality between rural and urban regions and because there is imperfect competition in city labor markets. Using aggregate city-level data from the 2010 China Population Census, we find that the positive effect of human capital on city productivity improves as the substitutability increases. Moreover, grid-search shows that the “best” estimate of the substitutability in China is between 2.1 and 2.5, far from being complete.

Keywords: rural-urban migration; city productivity; human capital; substitutability; employment density

JEL Classification: O15, R12, O53

Suggested Citation

Yu, Jixiang and Shen, Kunrong and Liu, Desu, Rural-Urban Migration, Substitutability of Human Capital and City Productivity: Evidence from China (December 7, 2014). Available at SSRN: https://ssrn.com/abstract=2484164 or http://dx.doi.org/10.2139/ssrn.2484164

Jixiang Yu

Anhui Science and Technology University ( email )

Donghua Road 9
Fengyang, Anhui Province 233100
China

Kunrong Shen

Nanjing University - Department of Economics ( email )

Hankou Road 22
Nanjing, Jiangsu 210093
China

Desu Liu (Contact Author)

Nanjing University - School of Business, Department of Finance and Insurance ( email )

Room 1708, Anzhong Building, 16 Jinyin Street
Gulou District
Nanjing, Jiangsu 210093
China

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