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Title: Rural migrants, urban living conditions and spatial equilibrium (with Joan Monras, Marlon Seror and Yanos Zylberberg)

Abstract: This paper provides new theory and evidence on how the consumption patterns of rural migrants and their sensitivity to living conditions affect the distribution of activity across Chinese cities. We first present two stylized facts on rural-urban migrants in China. (i) Rural migrants sort into large cities that offer high wages but also that suffer from high living costs and low amenities. (ii) Migrants are less sensitive to bad living conditions in cities, especially when tighter registration requirements make it harder for them to settle there. We then develop a quantitative spatial model in which migrants partly consume and enjoy amenities in their origin locations. Our quantitative model of location choice explains why migrants choose large cities with high wage and low living conditions, which further increases congestion in these cities. Consumption imbalances have a significant impact on the allocation of workers between rural areas and cities. They also have an impact on their allocation across cities and migration restrictions may backfire: when migrants are not allowed to settle at destination, they become less sensitive to local living conditions and the largest cities grow even more.