Hukou Frictions In Consumption Behavior

If productivity of labor is vastly different across cities,output can in principle be increased by expanding employment in high-productivity cities.However,the Hukou registration system has systematically created barriers against free mobility of labor in China.In this paper,we are trying to measure Hukou frictions in consumption behavior,because stylized facts have shown that the Hukou system has a significant impact on consumption behavior instead of wages,and it is mainly because Hukou provides people and their children with localised access to social and welfare resources in fact.More specifically,migrants without local Hukou have to pay higher prices for public goods such as health care,education and housing.Using Rural-Urban Migration in China(RUMi C)dataset from 2008 to 2011,which surveyed both urban households and migrant households in a specific city and contains panel information on consumption,and based on life-cycle model,we estimated the relative price paid for Hukou-related public goods by migrants and local residents in 15 cities which can be,to some extent,seen as a good measure of the Hukou friction.