The Impact Of Labor Migration On China’s Industrial Agglomeration

Institutional change and economic transformation is a significant social background for the past thirty years in China, during the period many areas come into development. At the beginning of the Reform and Opening, coastal areas possess superiority condition in capital and policy as the window of China towards the outside world, thus get the first chance of industrial economic development. Depending on the initial advantage of economic agglomeration, after rapid development of30years, coastal areas absorb capital, technology and human resources from underdeveloped mid-west area, which enforces its dominant position further more. Meanwhile, the slow development of mid-west area in China widens the gap between it and the east area. The phenomenon forms an economic development pattern which takes coastal area as centre, inland as periphery. At the same time, decreasing barriers to migration restrictions and the stimulus of widening regional economic gap, leading to the rapid development of labor migration scale, which together cause numbers of the mid-western labor flow to the southeast coastal area, and form the phenomenon of "the Peacocks fly to the southeast". According to traditional economic theory, labor mobility is beneficial to improve the income level of underdeveloped regions, thereby narrow the development gap between different regions. However, it is obvious that the development of Chinese Reform and Opening in the past30years is not consistent with relative theories. The thesis bases on the attention to this situation and deals with the following issues:the regularities and characteristics of labor migration; the interactive relationship between labor migration and industrial agglomeration; Chinese labor migration impact on industrial agglomeration and so on. The thesis probes and analyzes these issues. Main research achievements are as follows:First of all, the thesis teases out two theories:the reason of labor force migration theory and main theories of industrial agglomeration. Besides, it analyzes the interactive relationship between industrial agglomeration and labor migration. Industrial agglomeration is the concentration of productive activity, thus during the dynamic developing course of industrial agglomeration, it must be associated with the flow and concentration of some productive factors, for example, labor forces. Meanwhile, increasing wage level and living standard of an area, industrial agglomeration becomes the tension of labor migration, thus absorbs the inflow of industrial factors. While labor force is as basic factor of production and consumption, the flow and concentration of it are significant mechanism to accelerate the development of industrial agglomeration changes. In different economic conditions, labor migration exists two kinds of effects on the development of regional industry. The first kind is, as the flow and concentration of productive factors, combining with progressive increase of local industrial enterprises, external economy and the forward-backward correlative effect of industry, it promotes the concentration of industry in the locality; the other kind is that, for the inflow of factors and industries, industrial agglomerative scale excesses the bearing capacity of local immobile elements, thus leads to the uneconomic agglomerative scale and produces crowding effect, at last, promoting industrial transfer and diffusion.Secondly, we analyze the current situation of labor migration in China comprehensively and deeply, and probe the regulations and characteristics presented during the course the labor migration in China. Through empirical data analysis of Chinese labor migration, we find that labor migration in China possesses institutional, periodical and regional characteristics. During Planned Economy period, the management system based on the household registration system strictly confined the movement of population, thus result in a small moving scale. While since the Reform and Opening, as the elimination of the impediment to the population movement, the migration scale expands gradually, but it still possesses the periodical feature. From the beginning of the Reform and Opening to the early1990s, population movement is mainly nearby migration and also in the same province; later in1990s, inter-provincial migration population increase gradually. With the reform of household registration system, it becomes social normalcy that the population movement becomes more free and rapid. It is obvious that population movement possesses regional feature, that is, mainly moves from the central and western regions to the southeast coastal developed areas. Besides, the areas of destination and the outflow are always relatively concentrated.Thirdly. according to the logic basis of the theory of labor migration decision which is through the choice weighed by earnings and cost, and combining the empirical data at provincial level of China, we establishes multi-zone metering models to analyzes the factors involved in the labor migration of China. In the models, we take the wage income as the main earning. Carrying costs mainly contains three kinds:the separate provinces migration cost; the adjacent provinces migration cost and the inner province migration cost. The empirical analysis shows that income level is a major economic factor of labor flow, while the cost of it affects the scale and method of labor flow, thus the cost of inter-provincial migration is the main cause of nearby labor flow. The possibility of employment, trade freedom, market exposure, municipalities and other factors also affect labor flow in different degree.Fourthly, on the basis of new economic geography and industrial agglomeration theory, we establish econometric model on the correlation between industrial agglomeration and labor flow. We select economic datum of30provinces and cities in China Year Books from1998to2011, and examine the effect of Chinese labor migration on industrial agglomeration. In models, we replace the inflow population scale with the scale of urban permanent population. In order to assure the stability of models, we also add to some factors, such as FDI, import and export trade, geographical location, per capita income, non-public economy, level of education, road infrastructure. Empirical results manifest, though labor mobility dose facilitate industrial agglomeration in some degree, it could not affect as profoundly as FDI, import and export trade and geographical location do. Other factors have different influences on industrial agglomeration, while possess less outstanding effect than that of FDI. Our findings reveal that the advantage of Chinese coastal economic agglomeration mainly comes from its location closed to international market which forms the attraction to FDI and the advantage of import and export trade. The agglomeration effect brought by labor inflow and concentration is relatively lesser.Finally, based on the research achievements of the thesis, and the economic reality of the widening regional disparity in China, we put forward the following policy suggestions. The first, the government should take fundamental reform to the household registration system, to improve the social security system of the labor force, especially for migrant workers, and to promote the spatial agglomeration population. The second, starting from the regional harmonious development. Chinese government should increase the support for inland areas to promote the urbanization process of mid-west area, in order to realizing the rise of central China. The third, perfect the regional transportation and information network construction; strengthen the economic ties between coastal and inland area and promote the interactive development between them. The fourth, eliminate trade barriers among the inland further, reduce local economic protection, encourage economic and technological cooperation of different domestic regions, especially strengthen the economic ties between the coastal and the mainland, consolidate and deepen the domestic market integration.