Educational Choice, Rural-urban Migration and Economic Development

Observing China's rapid skill-enhanced development and urbanization process accompanied by continual reforms of the household registration system, we explore the underlying drivers, highlighting the channel of rural to urban migration. In addition to conventional work-based migration, we incorporate education-based migration by constructing a dynamic spatial equilibrium model of migration decisions with educational choice. We then calibrate our model to fit the data from China over the 1980--2007 period. We find that the effects of education-based migration on total per capita output cannot be ignored. There also exist rich interactions between the two migration channels. Furthermore, our results suggest that the increase in the college admission selectivity for rural students seriously depresses China's development. Policy experiments on migration and labour-market regulations are also conducted to assess their quantitative significance.