Peer Effects, Parental Migration and Children's Human Capital: A Spatial Equilibrium Analysis in China

Abstract

In China, migrant children are disadvantaged and sometimes cannot enroll in public schools in migration destinations due to some policy restrictions. Some migrant workers have to leave their children behind in their hometowns, which causes the left-behind children problem. In this study, I first identify the peer effects of migrant children and left-behind children on their classmates using classroom random assignment. I then analyze the human capital consequences of the enrollment restriction on migrant students within a spatial equilibrium model. My results show that there are negative spillovers from migrant and left-behind students. The negative effect is generally larger from left-behind students, but both shrink over time. In the counterfactual analysis, I find that if the enrollment restriction on migrant children is relaxed, migration of parents and children will increase, and the average human capital in the society will also increase. Low-skill families from small cities benefit most. This policy increases human capital through two channels. First, it directly increases enrollment in good public schools and alleviates the left-behind children problem. Second, it attracts more parents to take their left-behind children to migrate with them and indirectly reduces the total spillovers. This is the first formal quantitative analysis of public school enrollment policy in China.