The Impact of Inter-regional Labor Migration on Economic Growth and Regional Disparity (draft)

Based on the China Regional Input-Output tables 2002 and other data from various sources, a 30 regions recursive dynamic computable general equilibrium model (CGE) was constructed to study the effect of inter-regional labor migration in China. This model has taken into account of many characteristics of migration in China, such as wage gap between migration and local workers, population migration lagged behind labor migration, large amount of cash transfer and so on. The simulation results show that inter-regional labor migration has little effect on the evolution of regional disparity of per capita GDP mainly due to the effect of “capital-chasing-labor”. However, we do find that regional disparity of per capita consumption decreased with the increasing number of interreginal migration. We can show that this is mainly due to the special migration characteristics of large scale of cash transfer between emigration and immigration regions. This result is different much from many empirical studies of China’s labor migration, most of which argue that inter-region migration in China will contribute much to the convergence of regional economy, but it do consistent with some theory models and consistent with the evolution of China regional disparity.