Internal Migration and Structural Change in China

This study empirically examines how internal migration in China has affected the shift in employment from agriculture to non-agricultural sectors using spatially granular destination areas (prefecture-level cities). The methodology quantifies both direct and indirect effects of internal migration: the direct effects reflect migration shocks on factor and product markets, while the indirect effects capture migration's influence on income per capita and sectoral productivity. Instrumental-variable estimates in 2SLS and 3SLS regressions indicate that migration substantially contributed to structural change. We find that both a direct effect and an indirect effect operating through increases in relative agricultural productivity contribute to the rise in the employment share of non-agricultural sectors. This article discusses the broader implications of these effects for China’s economic growth.