Rural centralized residence and labor migration: Evidence from China

What is it about?

The rural centralized residence (RCR), a policy that guides rural households to reside in centralized residential communities or central villages, has been widely implemented in China and other developing countries to promote rural development.This study estimated the impact of RCR on rural labor migration and investigated the mechanisms through which these effects are generated. To address the endogenous placement of RCR, we use the anticipated one-time housing subsidy for choosing RCR as the IV to estimate the effects of RCR, while controlling for the within-town contiguous-villages group fixed effects. The results indicate that the percentage of household members that are migrant workers decreased by 17.2 percentage points if households chose to embrace RCR on average. Several tests and robustness checks support the effectiveness of the identification strategy. Furthermore, we studied the impact channels of RCR. We found that RCR may affect rural labor migration by increasing local employment opportunities. In addition, it may reduce the search and transportation expenses for local jobs, and increase satisfaction with local supporting facilities.

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Photo by Andreas Gücklhorn on Unsplash

Photo by Andreas Gücklhorn on Unsplash

Why is it important?

This study presents the first econometric evidence on the impact of RCR on rural labor migration in China. Our findings have important policy implications for China and other developing countries and regions. It suggests that when planning and implementing RCR, enhancing the level of rural infrastructure, improving the living conditions of rural households, and providing more employment opportunities to promote the development of rural areas could reduce rural labor migration.