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Migrants and Firms: Evidence from China

Migrants and Firms: Evidence from China

460/2020 Clément Imbert, Marlon SerorYanos Zylberberg and Yifan Zhang
working papers,culture and development

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