From Openness to Reform:Evidence of China's Hukou Reform
One key objective in trade liberalization is the promotion of domestic institutional reforms.However,there is a major gap in the understanding of its theoretical and mechanistic underpinnings.This paper examines the mechanism through which openness triggers reform,focusing on the household registration system(hukou)reform from the perspective of trade policy uncertainty(TPU).This study develops a theoretical model of monopolistic competition that integrates endogenous decisions on TPU,firm entry,and government institutional reform.Using the granting of Permanent Normal Trade Relations(PNTR)to China as a trade liberalization event that reduced TPU,and leveraging advanced AI Large Language Models(LLMs)for text analysis alongside the shift-share method,the study demonstrates that trade liberalization prompts hukou reforms by local governments by strengthening the bargaining power of migrants and firms.A closer analysis reveals that trade liberalization initially promoted reforms related to the protection of the migrants,and then gradually influenced urbanization and housing-related reforms.Cities with a high proportion of low-tech-intensive industries,higher rates of public spending showed more pronounced facilitating effects,while the rise in TPU following the 2008 financial crisis had a negative impact on reforms.This study advances the theoretical understanding of how openness triggers reform from the perspective of uncertainty,offering valuable empirical insights to inform and guide future institutional reforms.
trade liberalizationhousehold registration system(hukou)reformtrade policy uncertaintyentry of firms
万方数据
维普
