Housing Price, Migration Friction and the City-Size Distribution in China——Theory Model and Structural Estimation
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| Title | Housing Price, Migration Friction and the City-Size Distribution in China——Theory Model and Structural Estimation
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| Author | Liu Xiuyan and Li Songlin |
| Organization | School of economics & management, Southeast University |
| Email | lxiuyan320@seu.edu.cn；lslseu@163.com |
| Key Words | Migration Friction；Structural Estimation；City-Size Distribution |
| Abstract | What are the key factors of the city-size distribution? Why is urban system in China so even that primacy index of a city cluster is usually lower? In order to answer these questions, this paper constructs theoretical model involving with migration decisions of heterogeneous individuals and also endogenous housing prices. We attribute the existing city-size distribution to four dimensions including productivity, amenity, migration friction and housing prices. That is to say, higher economic productivity and better amenity both increase the population scale of city, but consequent higher housing prices and negative externalities such as migration friction could hamper further growing of urban size. We then quantities the productivity, amenity, housing price and migration friction of cities in China using structural estimations, and simulate how these factors could change the city-size distribution by counter factual experiment. We find that key determinants of city size in China are productivity, living amenity as well as migration friction. Housing price gap between cities scarcely influence the distribution of urban population while new allocation of urban population and substantial welfare improvement would have occurred once there is no so-called migration friction. This conclusion suggests the migration friction is the key factor leading to this even urban system. Seen in this point of view, gradually eradicating the “hukou” restrictions and lower the “friction” of labor migration is the predominant way to stimulate the forming of more efficient urban system through market mechanism. |
| Serial Number | WP1261 |
| Time | 2018-02-05 |
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