Rural-urban migration and labor market fluctuations over China’s business cycles

Abstract

The economic literature has long recognized the importance of rural-urban migration as a structural transformation in developing countries. How about the rural-urban migration dynamics over business cycles and its interaction with the urban labor market fluctuations? I motive the study by documenting the stylized facts of the Chinese labor market and migration dynamics. That shows some negative correlation between the rural-urban migration and the urban unemployment rate. Furthermore, I demonstrate the negative effects of the urban unemployment rate on the migration using micro data from CFPS. In the district-level regression, I find that the urban unemployment rate has a negative effect on the rural-urban migration rate. The effects are more pronounced for young, nonhomeowners, and high-educated individuals, and in the middle and western regions. Finally, I build a search and matching model with rural-urban migration to study the labor market dynamics over business cycles. I want to highlight the behavioral responses and welfare implication of the rural-urban migrants to the unemployment shocks in the urban labor market. Because of the mobility barriers, migrant workers are more vulnerable to the unemployment shocks. They may leave the urban labor market and thus are missed in the unemployment pool. That kind of rural-urban migration makes that the urban unemployment rate can not fully reflect the welfare loss of the economy.

Date of Award	2024
Original language	English
Awarding Institution	The Hong Kong University of Science and Technology
Supervisor	Marc DORDAL CARRERAS (Supervisor)