Which Chinese cities are more inclusive and why?

Abstract

China's household registration system allows local governments to control migration by limiting migrants' eligibility to local public services. Many cities exclude migrant residents from important social benefits, which reduces labor mobility and contributes to the socioeconomic gap between migrants and urban natives. This study measures the extent of China's local migration restriction from the perspective of inclusive provision of public services and explains cross-city disparities. We define urban inclusiveness as the extent to which migrants can access social benefits provided locally and construct an urban inclusiveness index using factor analysis. We find significant cross-city differences in urban inclusiveness toward migrants. Statistical analyses suggest that local fiscal capacity and labor demand, instead of cultural tradition, are the major determinants of urban inclusiveness. We further use the gap between the inclusiveness toward high- and low-skilled migrants to measure local skill-based migration selectivity. We find that more developed cities, i.e., cities with larger populations, higher levels of gross regional product per capita, and greater shares of industrial sector, are more selective based on migrants' skills, while cultural openness does not help bring down skill-based selectivity. Our research suggests an instrumental view of migrants in China's urban policy that contributes to social inequality and the lack of labor mobility, which can restrict China's development in the long term.