The Effects of Rural-Urban Migration on Corporate Innovation: Evidence from a Natural Experiment in China

41 Pages Posted: 24 Apr 2019

See all articles by Deqiu Chen

Deqiu Chen

University of International Business and Economics (UIBE) - Business School

Huasheng Gao

Fanhai International School of Finance, Fudan University

Jiang Luo

Nanyang Technological University (NTU) - Division of Banking & Finance

Yujing Ma

Business School, University of International Business and Economics

Date Written: March 25, 2019

Abstract

We show that the migration of low-skilled, rural workers to urban centers has a negative causal effect on innovation of firms in such urban centers. Our tests exploit the staggered relaxation of city-level household registration system in China, which facilitates rural residents to migrate to cities. We find a significant decrease in innovation for firms headquartered in cities that have adopted such policies relative to firms headquartered in cities that have not. Overall, our results support the view that an abundant supply of low-skilled workers increases the benefit of using existing low-skilled technology and thus reduces firms’ incentive to innovate.

Keywords: Innovation, Patents; Migration, Low-Skilled Worker, Household Registration, Hukou

JEL Classification: G38, J24, O31

Suggested Citation

Chen, Deqiu and Gao, Huasheng and Luo, Jiang and Ma, Yujing, The Effects of Rural-Urban Migration on Corporate Innovation: Evidence from a Natural Experiment in China (March 25, 2019). Available at SSRN: https://ssrn.com/abstract=3360197 or http://dx.doi.org/10.2139/ssrn.3360197

Deqiu Chen

University of International Business and Economics (UIBE) - Business School ( email )

Beijing
China

Huasheng Gao (Contact Author)

Fanhai International School of Finance, Fudan University ( email )

Beijing West District Baiyun Load 10th
Shanghai, 100045
China
2165642222 (Phone)
2165642222 (Fax)

Jiang Luo

Nanyang Technological University (NTU) - Division of Banking & Finance ( email )

S3-01C-75 50 Nanyang Avenue
Singapore, 639798
Singapore

Yujing Ma

Business School, University of International Business and Economics ( email )

425 Ning Yuan Building,10 Hui Xin Dong Jie
Beijing, Beijing 100000
China

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