Joan Monras is a Visiting Research Scholar, Economics and the International Economics Section.
Joan Monras will be presenting in person. Viewers may also attend via Zoom.
This paper provides new theory and evidence on how the consumption patterns of rural migrants and their sensitivity to living conditions affect the distribution of activity across Chinese cities. We present three stylized facts on rural-urban migrants in China. (i) Rural migrants sort into large cities that offer high wages but also suffer from high living costs. (ii) They are less sensitive to living conditions in cities when tighter registration (Hukou) requirements make it harder for them to settle there. (iii) They remit a higher share of their income in stricter Hukou destinations. We develop a quantitative spatial model in which migrants partly consume in their origin locations. Our quantitative model of location choice explains why migrants disproportionately choose large cities with high wages and high rents. We estimate the model and compute counterfactual migration flows when Hukou restrictions are eased: we predict a reallocation of migrants away from larger cities.