Human Capital Spillovers, Labor Migration and Regional Development in China

46 Pages Posted: 10 Jun 2009 Last revised: 8 May 2015

See all articles by Yuming Fu

Yuming Fu

National University of Singapore

Stuart A. Gabriel

University of California, Los Angeles - Anderson School of Management

Date Written: June 8, 2009

Abstract

This study applies unique data from the 1990s period of economic liberalization in China to evaluate the effects of human capital spillovers on urbanization and regional agglomeration of human capital. We examine these effects via a utility maximizing directional migration model, which accounts for heterogeneous migration costs and benefits among population strata. We use model estimates to decompose and evaluate human capital spillover effects as derive from three distinct sources, including productivity effects (social returns to schooling), skill premia (skill complementarity in production), and non-wage benefits (quality of life and learning opportunities). In contrast to extant literature emphasizing skill complementarity, we find significantly stronger non-wage than wage effects in the determination of regional human capital agglomeration. However, among low-skill migrants, non-wage benefits are substantially reduced - due likely to urban segregation that deprives low-skill migrants of social externalities. This finding suggests limited human capital spillovers among low-skill migrants and hence dampened long-run growth benefits to Chinese urbanization. Finally, we find that urban concentration of skilled workers was more important than foreign direct investment, the prominent source of technology transfer in China during the 1990s, in attracting skilled workers.

Suggested Citation

Fu, Yuming and Gabriel, Stuart A., Human Capital Spillovers, Labor Migration and Regional Development in China (June 8, 2009). A revised version was published as "Labor Migration, Human Capital Agglomeration and Regional Development in China" Regional Science and Urban Economics, Vol. 42, No. 3, 2012, Available at SSRN: https://ssrn.com/abstract=1417281 or http://dx.doi.org/10.2139/ssrn.1417281

Yuming Fu (Contact Author)

National University of Singapore ( email )

Department of Real Estate, NUS Business School
15 Kent Ridge Drive
S119245
Singapore

Stuart A. Gabriel

University of California, Los Angeles - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States
310-825-2922 (Phone)
310-206-5455 (Fax)

HOME PAGE: http://www.anderson.ucla.edu

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