Cost-benefit analysis of the Hukou reform: Simulation evidence from a theoretical labor market model

We found that the cost of the policy could be offset by the increase in national GDP

Yang Song

2021

Scholarcy highlights

  • We built a labor market model in China to incorporate key features of the current Chinese Hukou system
  • Simulation analyses showed that when the Hukou system was fully reformed or abolished, more older workers would migrate to cities, leading to a rise in national GDP and a large reduction in nation-wide income inequality
  • We found that the cost of the policy could be offset by the increase in national GDP
  • The budget concern should not be the obstacle for the Hukou reform
  • In order to reduce inequality, the government should promote more fundamental Hukou reforms

Need more features? Save interactive summary cards to your Scholarcy Library.