Human capital externalities and rural–urban migration: Evidence from rural China

Abstract

This study examines the determinants of rural–urban migration paying special attention to the role of human capital externalities in the rural sector. Using data from a well-known household survey in China, we find that in rural areas human capital externalities have a discouraging effect on rural–urban migration—everything else being the same, a rural resident from a county rich in human capital is less likely to migrate to the city than his counterpart from another county poor in human capital endowment. We also find some evidence that human capital exerts positive external effects on the likelihood for a rural resident to choose off-farm employment and on labor income in the rural sector. These results are robust to alternative model specifications and estimation methods. One important policy implication from this study is that expanding education opportunities in rural areas can help curtail rural–urban migration and therefore alleviate urban unemployment pressure.