The role China’s amenities play in spatial sorting of migrants and their impact on welfare

What is it about?

China’s household registration policies differentially limit access to amenities for high- and low-skilled workers, thereby decisively influencing their migration patterns and changes in welfare inequality. China’s amenities promote increased trends in skill sorting and reduce welfare inequality between high- and low-skilled workers.

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Photo by Claire Chang on Unsplash

Photo by Claire Chang on Unsplash

Why is it important?

In this study, I adopt a new approach to reconstruct the city-skill level average wages by combining the deep learning model Variational Auto Encoder and a weighting method, which effectively overcome the lack of labor wages in China's census data. There is reason to believe that the wages reconstructed with this treatment are closer to reality than those reconstructed by other methods in the previous literature. I also investigate a new inequality mechanism that incorporates migration costs due to household registration policy in the benchmark model, while ensuring that I can quantify the impact of migration costs on welfare inequality through amenity changes. In addition, I replace the traditional linear dimensionality reduction method with a new nonlinear dimensionality reduction method to obtain the amenity index, which improves the dimensionality reduction effect.

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