Working papers
How do Wage and the hukou System Affect Internal Migration in China: a Dynamic Analysis.
Abstract
Over the past four decades, significant labour mobility restrictions and large-scale internal migration have gone hand in hand in China. To study individuals’ migration and employment decisions throughout the life-cycle and their subsequent impacts on the economy, I develop a general-equilibrium dynamic discrete-choice model of agents making decisions in an environment with idiosyncratic income shocks and explicit migration restrictions. Using data from the China Family Panel Studies (CFPS) wave 2010-2018 for calibration, the model reveals that mobility restrictions hinder internal migration and aggregate output substantially. If these restrictions were eased, the migration rates for low- and high-skilled workers would increase by 19.9% and 6.6%, respectively. Meanwhile, labour market participation rates would rise by 17.6% for low-skilled workers and 0.9% for high-skilled workers. These shifts would contribute to a 12.7% increase in the GDP excluding agricultural sector and improve social welfare by 5.3%; however, they would also exacerbate wage inequality between low- and high-skilled workers in urban areas. These effects would be dramatically increased if labour mobility restrictions were completely eliminated.
Smoking, Health Disparity and Earnings-Wealth inequality over the Life-Cycle.
Abstract
I study individuals' smoking decisions under subjective beliefs about the health risks associated with unhealthy habits, and how healthy disparities ultimately contribute to earnings and wealth inequalities. I develop a life-cycle model of smoking, health, labour supply and savings behaviour, introducing one novel feature. This model includes a heterogeneous smoking-related health risk factor that are unobservable to agents; they must update their beliefs about this factor through health shocks and make smoking decision subsequently. Health shocks drive health dynamics which affect individuals' productivity, labour supply, morbidity, mortality, and medical expenses. The model is estimated on data from China Family Panel Studies (CPFS), using Method of Simulated Moment.
Wage and Social Insurance Participation Inequality in China’s Urban Labour Market.
Abstract
The internal migration study in China is dominated by the rural-urban framework since the 1990s, because the unique hukou system (household registration) segments labour market across rural and urban areas. This paper adopts a new classification standard to identify urban locals and migrant groups. Using the China Family Panel Studies 2018 data, this paper examines the migration effect on wage distribution and social insurance participation in China’s urban labour market. The results show that migration has a positive effect on wage at low- and medium-wage levels. The distributional decomposition results demonstrate that there is a large proportion of positive unexplained wage differentials between migrants and urban natives, implying unobservable factors among migrants. Moreover, the results also show that inter-provincial migration has a significantly negative effect on social insurance participation. This paper also constructs a simple job quality index that indicates the job quality of inter-provincial migrants is significantly lower than that of urban natives.
Work in progress
A spatial-equilibrium lifecycle model in China
How do Wage and the hukou System Affect Internal Migration in China: a Dynamic Analysis.
Abstract
Over the past four decades, significant labour mobility restrictions and large-scale internal migration have gone hand in hand in China. To study individuals’ migration and employment decisions throughout the life-cycle and their subsequent impacts on the economy, I develop a general-equilibrium dynamic discrete-choice model of agents making decisions in an environment with idiosyncratic income shocks and explicit migration restrictions. Using data from the China Family Panel Studies (CFPS) wave 2010-2018 for calibration, the model reveals that mobility restrictions hinder internal migration and aggregate output substantially. If these restrictions were eased, the migration rates for low- and high-skilled workers would increase by 19.9% and 6.6%, respectively. Meanwhile, labour market participation rates would rise by 17.6% for low-skilled workers and 0.9% for high-skilled workers. These shifts would contribute to a 12.7% increase in the GDP excluding agricultural sector and improve social welfare by 5.3%; however, they would also exacerbate wage inequality between low- and high-skilled workers in urban areas. These effects would be dramatically increased if labour mobility restrictions were completely eliminated.
Smoking, Health Disparity and Earnings-Wealth inequality over the Life-Cycle.
Abstract
I study individuals' smoking decisions under subjective beliefs about the health risks associated with unhealthy habits, and how healthy disparities ultimately contribute to earnings and wealth inequalities. I develop a life-cycle model of smoking, health, labour supply and savings behaviour, introducing one novel feature. This model includes a heterogeneous smoking-related health risk factor that are unobservable to agents; they must update their beliefs about this factor through health shocks and make smoking decision subsequently. Health shocks drive health dynamics which affect individuals' productivity, labour supply, morbidity, mortality, and medical expenses. The model is estimated on data from China Family Panel Studies (CPFS), using Method of Simulated Moment.
Wage and Social Insurance Participation Inequality in China’s Urban Labour Market.
Abstract
The internal migration study in China is dominated by the rural-urban framework since the 1990s, because the unique hukou system (household registration) segments labour market across rural and urban areas. This paper adopts a new classification standard to identify urban locals and migrant groups. Using the China Family Panel Studies 2018 data, this paper examines the migration effect on wage distribution and social insurance participation in China’s urban labour market. The results show that migration has a positive effect on wage at low- and medium-wage levels. The distributional decomposition results demonstrate that there is a large proportion of positive unexplained wage differentials between migrants and urban natives, implying unobservable factors among migrants. Moreover, the results also show that inter-provincial migration has a significantly negative effect on social insurance participation. This paper also constructs a simple job quality index that indicates the job quality of inter-provincial migrants is significantly lower than that of urban natives.
Work in progress
A spatial-equilibrium lifecycle model in China
