460/2020 Clément Imbert, Marlon SerorYanos Zylberberg and Yifan Zhang 

How does rural-urban migration shape urban production in developing countries? We use longitudinal data on Chinese manufacturing firms between 2001 and 2006, and exploit exogenous variation in rural-urban migration induced by agricultural price shocks for identification. We find that, when immigration increases, manufacturing production becomes more labor-intensive in the short run. In the longer run, firms innovate less, move away from capital-intensive technologies, and adopt final products that use low-skilled labor more intensively. We develop a model with endogenous technological choice, which rationalizes these findings, and we estimate the effect of migration on factor productivity and factor allocation across firms.

Culture and Development

American Economic Review

https://doi.org/10.1257/aer.20191234