Trade Costs,Internal Migration and Income Inequality
Given that China possesses a large and potential domestic market,we present a heterogeneous-agent model examining trade and migration patterns among Chinese regions,and analyze the change in income inequality.We quantify the internal and international trade costs,total factor productivity(TFP)and internal migration costs using National Census data and Inter-provincial Input-output data from 2000 to 2015.Our findings indicate that both internal and international trade costs,as well as internal migration costs,have decreased.TFP has shown a trend of first increasing and then decreasing,with regional variations.We quantify the impact of these exogenous shocks on national and provincial economic growth and income distribution in China.The results show that the decrease in internal and international trade costs and the change in provincial TFP can promote the growth of real GDP.However,these shocks may also exacerbate national income inequality,increasing the Gini coefficient by 0.020,0.010,and 0.109,respectively,between 2000 and 2015.Based on Dagum's decomposition,interprovincial income inequality is significantly higher,serving as the primary contributor to national income inequality.Furthermore,lower migration costs can reduce interprovincial income inequality,with the Gini coefficient decreasing more substantially when interacting with shocks in trade costs and TFP.We further decompose income into labor and capital income,revealing that under exogenous shocks from trade costs and TFP,both labor and capital income inequality tend to widen across provinces,leading to a general rightward shift in income distribution.Simultaneous migration cost shocks can reduce interprovincial inequality.Additionally,we classify the provinces into four regions—Eastern,Central,Western,and Northeastern—and find regional heterogeneity.We also evaluate the heterogeneous effects at the provincial level.The conclusion suggests that it is important to fully recognize the bidirectional role of internal and international trade shocks,along with TFP shocks,in promoting economic growth while also intensifying income inequality.It is essential to leverage the potential of China's vast domestic market and continuously promote the construction of a unified national market.Concurrently,managing the relationship between economic growth and common prosperity is crucial.We offer policy insights with the goal of mitigating income inequality and achieving common prosperity through reducing barriers to migration across regions.
trade costsmigration coststotal factor productivityincome inequalityconstruction of a unified national market
NETL
NSTL
万方数据
