Dennis Egger
@eggerdennis.bsky.social
Associate Professor of Economics @OxfordEconDept Working on general equilibrium effects of cash and social protection, migration, and networks.
www.dennisegger.net
www.dennisegger.net
A non-technical summary also on VoxDev China.
Rural-Urban Migration and Market Integration
Reductions in rural-to-urban migration barriers have led to economic gains for both rural origins and urban destinations by reducing information frictions and facilitating the flow of goods and invest...
voxchina.org
November 19, 2025 at 3:22 PM
A non-technical summary also on VoxDev China.
Policies that reduce rural-urban migration barriers can thus do much more than move labor.
They can knit together markets, accelerate information flow, and foster inclusive development.
They can knit together markets, accelerate information flow, and foster inclusive development.
November 19, 2025 at 3:22 PM
Policies that reduce rural-urban migration barriers can thus do much more than move labor.
They can knit together markets, accelerate information flow, and foster inclusive development.
They can knit together markets, accelerate information flow, and foster inclusive development.
Bottom line: China’s Hukou reforms boosted integration between rural and urban regions—expanding both economic opportunity and connectivity.
November 19, 2025 at 3:22 PM
Bottom line: China’s Hukou reforms boosted integration between rural and urban regions—expanding both economic opportunity and connectivity.
Interestingly, while rural regions gain the most in migration access, urban destinations capture larger benefits in trade and investment access—about 40% higher on average.
Why? Each city connects to many rural origins, amplifying the benefits.
Why? Each city connects to many rural origins, amplifying the benefits.
November 19, 2025 at 3:22 PM
Interestingly, while rural regions gain the most in migration access, urban destinations capture larger benefits in trade and investment access—about 40% higher on average.
Why? Each city connects to many rural origins, amplifying the benefits.
Why? Each city connects to many rural origins, amplifying the benefits.
A 10% increase in migration market access raises:
📈 trade market access by 1.5%
📈 investment market access by 2%
These are important amplifications of the traditional gains from migration.
📈 trade market access by 1.5%
📈 investment market access by 2%
These are important amplifications of the traditional gains from migration.
November 19, 2025 at 3:22 PM
A 10% increase in migration market access raises:
📈 trade market access by 1.5%
📈 investment market access by 2%
These are important amplifications of the traditional gains from migration.
📈 trade market access by 1.5%
📈 investment market access by 2%
These are important amplifications of the traditional gains from migration.
To get at regional impacts of Hukou reform, we model these mechanisms using a spatial equilibrium framework with:
-- Bilateral migration costs (like Hukou restrictions)
-- Mobile capital
-- Matching frictions in trade and investment tied to migrant networks
-- Bilateral migration costs (like Hukou restrictions)
-- Mobile capital
-- Matching frictions in trade and investment tied to migrant networks
November 19, 2025 at 3:22 PM
To get at regional impacts of Hukou reform, we model these mechanisms using a spatial equilibrium framework with:
-- Bilateral migration costs (like Hukou restrictions)
-- Mobile capital
-- Matching frictions in trade and investment tied to migrant networks
-- Bilateral migration costs (like Hukou restrictions)
-- Mobile capital
-- Matching frictions in trade and investment tied to migrant networks
In short: easing migration barriers doesn’t just move people—it connects markets.
More migration → more trade → more investment → more rural opportunity. 🔄
More migration → more trade → more investment → more rural opportunity. 🔄
November 19, 2025 at 3:22 PM
In short: easing migration barriers doesn’t just move people—it connects markets.
More migration → more trade → more investment → more rural opportunity. 🔄
More migration → more trade → more investment → more rural opportunity. 🔄
This is driven by new buyer-seller and investor-investee pairs, which increase by ~3%. New linkages are formed, in line with a view that migration reduces matching frictions and helps spread market information.
November 19, 2025 at 3:22 PM
This is driven by new buyer-seller and investor-investee pairs, which increase by ~3%. New linkages are formed, in line with a view that migration reduces matching frictions and helps spread market information.
What do we find? A 10 percentage-point increase in Hukou eligibility leads to:
📈 +1.5% in trade flows ⇄
📈 +4.5% in urban → rural investment
📈 +3.5% in rural → urban investment
📈 +3% in ruural→ urban migration flows
📈 +1.5% in trade flows ⇄
📈 +4.5% in urban → rural investment
📈 +3.5% in rural → urban investment
📈 +3% in ruural→ urban migration flows
November 19, 2025 at 3:22 PM
What do we find? A 10 percentage-point increase in Hukou eligibility leads to:
📈 +1.5% in trade flows ⇄
📈 +4.5% in urban → rural investment
📈 +3.5% in rural → urban investment
📈 +3% in ruural→ urban migration flows
📈 +1.5% in trade flows ⇄
📈 +4.5% in urban → rural investment
📈 +3.5% in rural → urban investment
📈 +3% in ruural→ urban migration flows
On average, Hukou became substantially less restrictive. Between 2014 - 2019, our period of study, on average, 10 percent of rural origin populations became eligible to get urban Hukou across all rural-urban pairs.
November 19, 2025 at 3:22 PM
On average, Hukou became substantially less restrictive. Between 2014 - 2019, our period of study, on average, 10 percent of rural origin populations became eligible to get urban Hukou across all rural-urban pairs.
Together, the over 25k Hukou eligibility rules changes to date lead to a rich map of how migration barriers changed across ~1,650 rural counties and ~1,000 urban destinations over time and space.
November 19, 2025 at 3:22 PM
Together, the over 25k Hukou eligibility rules changes to date lead to a rich map of how migration barriers changed across ~1,650 rural counties and ~1,000 urban destinations over time and space.
While motivated by labor demand at the destination (which we net out using destination-by-time fixed effects), such policies create differential changes in eligibility across origins – directly, and due to varying population characteristics!
November 19, 2025 at 3:22 PM
While motivated by labor demand at the destination (which we net out using destination-by-time fixed effects), such policies create differential changes in eligibility across origins – directly, and due to varying population characteristics!
For example, a city's planning commission may determine that more female workers aged 20-40 with a high-school degree would benefit local industry. They might implement this new eligibility rule first within the province, then extend it to other regions.
November 19, 2025 at 3:22 PM
For example, a city's planning commission may determine that more female workers aged 20-40 with a high-school degree would benefit local industry. They might implement this new eligibility rule first within the province, then extend it to other regions.
The Hukou system long restricted access to urban jobs, housing, and services. Reforms in the last decades at the municipal and city level targeting specific origins and types of workers create rich variation in Hukou eligibility across bilateral rural-urban routes.
November 19, 2025 at 3:22 PM
The Hukou system long restricted access to urban jobs, housing, and services. Reforms in the last decades at the municipal and city level targeting specific origins and types of workers create rich variation in Hukou eligibility across bilateral rural-urban routes.
We make progress by compiling a rich set of microdata from China (1978–2020):
-- County-to-county migration (censuses), trade (VAT transactions), and investment flows (from the universe of firm ownership stakes)
-- Digitized records of the universe of local Hukou reforms
-- County-to-county migration (censuses), trade (VAT transactions), and investment flows (from the universe of firm ownership stakes)
-- Digitized records of the universe of local Hukou reforms
November 19, 2025 at 3:22 PM
We make progress by compiling a rich set of microdata from China (1978–2020):
-- County-to-county migration (censuses), trade (VAT transactions), and investment flows (from the universe of firm ownership stakes)
-- Digitized records of the universe of local Hukou reforms
-- County-to-county migration (censuses), trade (VAT transactions), and investment flows (from the universe of firm ownership stakes)
-- Digitized records of the universe of local Hukou reforms
Answering this is challenging, because
a) we need granular within-country data on migration, trade, and
b) investment, and policies or investments that ease migration typically also directly affect trade and investment (--> violating the exclusion restriction).
a) we need granular within-country data on migration, trade, and
b) investment, and policies or investments that ease migration typically also directly affect trade and investment (--> violating the exclusion restriction).
November 19, 2025 at 3:22 PM
Answering this is challenging, because
a) we need granular within-country data on migration, trade, and
b) investment, and policies or investments that ease migration typically also directly affect trade and investment (--> violating the exclusion restriction).
a) we need granular within-country data on migration, trade, and
b) investment, and policies or investments that ease migration typically also directly affect trade and investment (--> violating the exclusion restriction).
Despite such stories, most of the empirical and theoretical work on rural-urban migration don’t emphasize this feedback loop —where migration lowers information barriers and connects rural and urban markets.
We ask: does easing migration restrictions boost trade and investment?
We ask: does easing migration restrictions boost trade and investment?
November 19, 2025 at 3:22 PM
Despite such stories, most of the empirical and theoretical work on rural-urban migration don’t emphasize this feedback loop —where migration lowers information barriers and connects rural and urban markets.
We ask: does easing migration restrictions boost trade and investment?
We ask: does easing migration restrictions boost trade and investment?
Example: Shaji Village, Jiangsu.
A migrant worker came back from Shanghai inspired by an Ikea store. He started making simple flat-pack furniture— easy to ship online. Today, Shaji is a major furniture cluster.
A migrant worker came back from Shanghai inspired by an Ikea store. He started making simple flat-pack furniture— easy to ship online. Today, Shaji is a major furniture cluster.
November 19, 2025 at 3:22 PM
Example: Shaji Village, Jiangsu.
A migrant worker came back from Shanghai inspired by an Ikea store. He started making simple flat-pack furniture— easy to ship online. Today, Shaji is a major furniture cluster.
A migrant worker came back from Shanghai inspired by an Ikea store. He started making simple flat-pack furniture— easy to ship online. Today, Shaji is a major furniture cluster.
Take China’s “Taobao Villages”
Many began when migrants returned home after working in cities. They used what they’d learned about urban demand to build thriving e-commerce hubs connecting rural producers to city buyers.
Many began when migrants returned home after working in cities. They used what they’d learned about urban demand to build thriving e-commerce hubs connecting rural producers to city buyers.
November 19, 2025 at 3:22 PM
Take China’s “Taobao Villages”
Many began when migrants returned home after working in cities. They used what they’d learned about urban demand to build thriving e-commerce hubs connecting rural producers to city buyers.
Many began when migrants returned home after working in cities. They used what they’d learned about urban demand to build thriving e-commerce hubs connecting rural producers to city buyers.
Many anecdotes of rural economic development start with migration.
When rural workers move to cities, they gain knowledge—about markets, buyers, products, and finance—that they later bring home to spark new industries.
When rural workers move to cities, they gain knowledge—about markets, buyers, products, and finance—that they later bring home to spark new industries.
November 19, 2025 at 3:22 PM
Many anecdotes of rural economic development start with migration.
When rural workers move to cities, they gain knowledge—about markets, buyers, products, and finance—that they later bring home to spark new industries.
When rural workers move to cities, they gain knowledge—about markets, buyers, products, and finance—that they later bring home to spark new industries.
Reposted by Dennis Egger
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November 14, 2025 at 9:01 AM
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