Fiscal Decentralization, Rural Industrialization and Undocumented Labour Mobility in Rural China, 1982–87

2016-08-19T09:45:29Z (GMT) by Yiu Por (Vincent) Chen
<p>Chen Y. P. Fiscal decentralization, rural industrialization and undocumented labour mobility in rural China, 1982–87, <i>Regional Studies</i>. This paper explores the relationship between fiscal decentralization, which gave greater rural industrialization and fiscal authority to local governments, and the emergence of rural–rural undocumented inter-provincial labour migration during China's initial reform period. A Heckman model is employed to correct for the zero observation problems and to estimate consistently the labour mobility with a modified gravity equation. Given the institutional barriers, the fiscal decentralization has two contending effects on labour market integration: local economic development promotes labour mobility, but local public goods crowding restrains the inflow of labour at the destination. The crowding effect is stronger at lower levels of government.</p>