Sectoral technological progress, migration barriers, and structural change in China

Abstract

We introduce a novel accounting method to infer sectoral technology and migration barriers among Chinese provinces, using data on structural change and migration from 1990 to 2010. The method is based on a multi-sector Eaton–Kortum model, embodying labor mobility friction across provinces. We find that the implied migration barriers are high and asymmetric. This asymmetry of migration barriers contributes to the expansion of provincial manufacturing labor share among all the provinces. Moreover, in a country with structural change, rich provinces gain less from inter-provincial trade than poor provinces.