Interprovincial Migration and Human Capital Formation in China*

Abstract

We examine how the rising interprovincial migration of individuals with diverse educational backgrounds affected human capital formation in China in the 1990s. We find that gross outflow migration of those with higher and lower levels of education, respectively, has human capital incentive and disincentive effects. Our estimates suggest that the incentive effect eclipses the disincentive effect in general; however, a surge of migration, particularly among less educated groups, implies more of a disincentive effect in China in the 1990s. We also find that changes in the relative labor supply resulting from net outflow migration mitigate a direct brain drain by both encouraging and discouraging school enrolments.