Transcript Economics of International Migration12 - e

Economics of International
Migration13
Jan Brzozowski, PhD
Cracow University of Economics
Internal migration and modernisation:
Chinese economy
• Basic facts & definitions
• Urbanization and housing market
• Return migration entrepreneurship on rural areas
• Savings and remittances: impact on rural areas
Basic facts & definitions
• 1978 – Deng Xiaoping takes lead in PRC;
economic and political reforms
• Economic reforms – movement toward
capitalism/free market economy
• Creation of special economic zones, attracting
FDIs, promoting export activities
Results:
GDP pc (USD 2005)
GDP pc (USD 2005)
45000
4000
40000
3500
35000
3000
2500
30000
2000
25000
1500
20000
1000
15000
500
10000
2012
2009
2006
2003
2000
1997
1994
1991
1988
1985
1982
1979
0
5000
0
Impressive economic growth…
PRC
Germany
PL
Still, the average standard of living very low
as compared to Western standards
Rapid urbanization
Urban population as % of total pop
60
50
Urban population (million)
800
457 mln in 30 years!
700
600
40
500
30
20
10
400
300
200
100
0
0
1979
1989
1999
75% of the urban population growth in 1979-2009 can be attributed to
net migration and urban reclassification
2009
2013
Stock of rural migrants in Chinese
cities in 2010: ca. 155 million
This means: the largest population
movement in human history!
Migrants are the backbone of PRC
export industry
In Shenzen and Dongguan export centers
rural migrants constitute from 70 to 80
percent of labor force
PRC is a capitalist state, but not a full
free-market economy
One of the examples of tight public
regulation is the labor market
hukou system
• Household Registration System, introduced in 1958 by Mao Zedong
administration
• every citizen who wants to change residence must obtain permission from
the public security bureau (hukou transfer)
• In fact, hukou works as a kind of internal passport and it’s inherited
• During Mao’s reign hukou helped in reglamenting and reducing migration
from rural areas to the cities (ensuring political and economical stability)
• Division of the (equal?) communist society into 2 classes: priviledged
habitants of the cities (access to better housing, education, employment
and health services) and marginalised „army” of 800 million peasants
After 1979 some changes in hukou
• The system is still operating, but „illegal”
migration is tolerated
• Still, it is almost impossible to change hukou and
become permanent residence in the cities
• Temporary residence is permitted for rural
workers, but without any entitlements to welfare
system avaliable for city workers
• This means that the migration is intentionally and effectivelly
temporary.
• Most of rural migrants cannot bring the family members to the
cities and do not receive public benefits
• They live in poor housing (worker’s dormitories), and their children
have to stay with grandparents in rural areas
• There are ca. 130 million „home-staying” children, left behind by
their parents in rural areas
• Hukou system widelly criticized for creating "caste system" of China
and increasing social inequality
Urbanisation and housing market
• Before 1978 - no private urban housing
market in PRC
• provision of urban housingwas within the
socialistwelfare system
• No private property – the apartments
belonged to the state companies/cooperatives
and were rented to workers
• 1983: private property ownership rights (including real
estate property) written into the Constitution, still the land
belonged only to the State
• 1995: introduction of urban commercial housing
transaction market and entry of private investors
• Untill 1995 – 80-90% of housing investment made by public
enterprises. After 1995 – less than 50%
• 1998: transition of welfare housing to privation property. By
2001, almost 100% of private housing in Shanhai, and up to
80% in other cities
Chen et al., 2011
Migration and housing market
• Most of While rural migrants had eligibility for public-sponsored
Urban Affordable Housing
• They had either to rent commercial residential housing or buy new
houses/apartments – growing demand for real estate after 1995
• the supply of urban housing in PRC after 1995 not flexible - not
influenced by the actual demand from the market, but controlled
by the land supply approved by the state
• Still – surprisingly – the flow of rural immigrants has only moderate
effect on real estate market. Probably because their income is to
small to affort buing an appartment in the city
Remittances: impact in the countryside
• having a migrant increases a household’s income
per capita by 8.5-13.1%.
• But this effect varies accross China’s provinces
• In Jiangsu and Anhui provinces the remittances
account for more than 50% of household income
Zhu et al. (2009)
• On average, the households of migrants are
poorer than those of non-migrants
• However, most of remittances are spent, not
saved
• Therefore, they are used for mostly
consumption not for investment
Return migration and
entrepreneurship
Case study: Anhui province, Wuwei County
• Due to hukou system most of rural-urban
migration is either circular or temporary
• This means that a considerable fraction of
migrants return to rural areas after working in the
coastal area (cities)
• Return migrants constitute ca. 6.3% of rural labor
force and 28.5% of the total migrant population
(2001)
Basic facts
• Migration started in 1980s
• Pioneers: females working as domestic
servants in the cities
• at the end of 2006, about 43% of the entire
rural labor force of the county was working
outside the county
Return migrants are younger, better educated than non-migrants. They show also higher
Entrepreneurshi propensity.
The migration experience increases the likelihood of
becoming entrepreneur by 20-35%
feng huan chao policy
(i.e.: phoenixes return to their nest)
• 1996: policy launched by local government to
encourage return migration
• By 31.12.2008: 16,200 return migrants, who have
started 1,113 enterprises and 6,199 individual
enterprises
• This accounted for 38.1% of total enterprises and
33.8% of total individual enterprises