Chinese Rural to Urban Migration:The Role of Non-Pecuniary Benefits in Migration Decisions

Abstract

Since the 1978 opening of the Chinese economy, increased rural to urban migration has both fueled economic growth and strained existing urban infrastructure. Although the Chinese government has attempted to slow this migration (through restrictive house hold registration programs,) it has continued on a massive scale. Many traditional models of migration in developing countries predict wage equalization and zero net migration at equilibrium, but there are no indicators that either of these outcomes will be observed in China. This paper considers the role of non-pecuniary benefits in migration decisions in China, identifies migration-inducing policies and suggests potential remedies. A set theoretic model of the decision-making process is approximated using a time series regression to analyze the migration decision process, comparing non-pecuniary wages in provinces over the five-year period from 2002 to 2006 to predict migration. The conclusions from this model are then compared with the findings of a Markov chain analysis of current Chinese employment trends.