TITLE:
Regional Productivity, Job Turnover and Profitability under Hukou Allocation System
AUTHORS:
Muhan Huang
KEYWORDS:
Productivity, Hukou System, Inefficient Match
JOURNAL NAME:
Theoretical Economics Letters,
Vol.6 No.5,
September
12,
2016
ABSTRACT: We investigate a possible role of the Hukou
allocation system (China’s household registration system) in influencing
regional productivity through a firm’s strategic behavior with respect to the
retention of workers. We show that the level of regional productivity can be
low due to inefficiency arising from the retention of mismatched workers when
Hukou are allocated to workers through their employer rather than being
allocated to them directly. This paper offers a new explanation for an observed
difference in firm productivity between Beijing and Shanghai in China, and
demonstrates that the way of allocating Hukou is a source of productivity
differences across regions.