Sectoral asymmetries and a social-welfare interpretation of Hukou |
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| Institution: | 1. China Economics and Management Academy, Central University of Finance and Economics, 39 South College Road, Beijing 100081, China;2. Center for Chinese Agricultural Policy, Institute of Geographical Sciences and Natural Resource Research, Chinese Academy of Sciences, 11A Datun Road, Chaoyang, Beijing 100101, China;3. School of Advanced Agricultural Sciences, Peking University, 5 Yiheyuan Rd, Haidian, Beijing 100089, China;4. U.S. Grains Council China, Beijing, China World Office 1, Suite 1010C, No. 1 Jianguomenwai Ave., Beijing 100004, China;1. School of Economics and Management, Beihang University, Beijing 100191, China;2. Center for Chinese Agricultural Policy (CCAP), Institute of Geographical Sciences and Natural Resources Research, Chinese Academy of Sciences, Beijing 100101, China;3. Southern Africa Regional Office, International Water Management Institute, Private Bag X813, Silverton, Pretoria 0127, South Africa;1. The Wang Yanan Institute for Studies in Economics (WISE), The MOE Key Laboratory of Econometrics, Xiamen University, Fujian 361005, China;2. Oppo Manado, St. Pierre Tendean, Ruko Mega Style Block D no 23, Megamas Boulevard, Manado, Sulut 95111, Indonesia;1. Hanqing Advanced Institute of Economics and Finance, Renmin University of China, Beijing 100872, China;2. American Institute for Economic Research, Great Barrington, MA 01230-1119, USA |
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| Abstract: | The Hukou system's restriction of Chinese internal migration is controversial. This paper models internal migration in a dual economy and assesses the social welfare consequences of the Hukou system. It contrasts the effects of absolute prohibition of migration with the mere exclusion of migrants from certain services such as health care and education. Asymmetries between the rural and urban sectors mean that optimality may require different levels of utility in the two sectors. The existence of a floating population, however, is inconsistent with an optimal labor allocation. |
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