Recently, Dr. Li Xiaolu, a young faculty member of College of Economics, co-authored with Dr. Ma Lin of Singapore Management University and Prof. Tang Yang of Nanyang Technological University, published a paper entitled “Migration and resource misallocation in China” in Journal of Development Economics 2024, vol. 167, as the first author. The paper is first signed by NJUPT.
The article provides structural estimates of firm-level frictions across regions of the country and quantifies aggregate and distributional effects. Based on a general equilibrium model that takes into account input and output frictions as well as population migration, it is found that firm-level frictions are less dispersed and less correlated with firm productivity in wealthier regions. Counterfactual tests show that reducing resource mismatch within regions increases aggregate welfare, dampens population migration to large cities, and reduces spatial inequality. In addition, internal migration of population mitigates the impact of microfrictions on aggregate welfare but exacerbates their impact on spatial inequality.
The article achieves three objectives: first, it proposes a general equilibrium framework that integrates microfrictions and a multiregional trade model that combines the micro-level frictions of Hsieh and Klenow (2009) with heterogeneous firms, endogenous firm entry of Melitz (2003), and takes into account population migration. Second, an empirical strategy is devised to structurally estimate the joint distribution of micro-level frictions and firm-level productivity within each location. Third, counterfactual simulations are conducted in the Chinese context to assess the impact of microfrictions on aggregate welfare, the spatial allocation of resources, and the relationship with regional migration.
Founded in 1974, Journal of Development Economics is the top journal in the field of development economics and is published six times a year. The journal mainly publishes original papers on various aspects of economic development, including policy research, regional economic structural research and so on. According to statistics, the journal receives an average of about 1,300 papers per year, with an acceptance rate of only 6% to 8%.
About the Author:
Li Xiaolu, Ph.D.,a lecturer at College of Economics, Nanjing University of Posts and Telecommunications.She graduated from College of Economics, Nanyang Technological University, Singapore, in 2017, and her main research interests are macroeconomics, urban economics. Her research papers have been published in international journals such as Journal of Development Economics, Journal of Housing Economics, Economic Modelling.
Original Text:
https://www.sciencedirect.com/science/article/abs/pii/S0304387823001748?via%3Dihub
(Written by Li Xiaolu, Yang Xiaojun Initially Reviewed by Yue Zhonggang, Luo Gongzhi Edited by Wang Cunhong Reviewed by Zhang Feng)
