Publication Type
Journal Article
Version
submittedVersion
Publication Date
3-2024
Abstract
We structurally estimate the firm-level frictions across prefectures in China and quantify their aggregate and distributional implications. Based on a general equilibrium model with input and output distortions and migration, we show that the firm-level frictions are less dispersed and less correlated with firm productivity in richer prefectures. Counterfactual exercises show that reducing the within-prefecture misallocation increases aggregate welfare, discourages migration toward large prefectures, and reduces spatial inequality. Moreover, internal migration alleviates micro-frictions’ impacts on aggregate welfare and worsens their effects on spatial inequality.
Keywords
Economic geography, Misallocation, Regional trade, Welfare gain
Discipline
Asian Studies | International Economics | Regional Economics
Research Areas
Applied Microeconomics
Publication
Journal of Development Economics
Volume
167
First Page
1
Last Page
15
ISSN
0304-3878
Identifier
10.1016/j.jdeveco.2023.103218
Publisher
Elsevier
Citation
LI, Xiaolu; MA, Lin; and TANG, Yang.
Migration and resource misallocation in China. (2024). Journal of Development Economics. 167, 1-15.
Available at: https://ink.library.smu.edu.sg/soe_research/2719
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1016/j.jdeveco.2023.103218