Heterogeneous Labor Migration And Regional Income Disparity: Theoretical Analysis And Empirical Study

The relationship between migration and regional income disparity has been an important topic for the economic research. So far, most of the literature on this topic has made the same assumption that is the labor homogeneity. However, that is not the case. In reality, labor heterogeneity is a common phenomenon. Labor heterogeneity lies in gender, age, physical force, mentality and concept, as well as education and skill. These differences undoubtly would cause the differences in the institutions and regional migration patterns that the migrating labor face, which affects the regional income disparity through the regional economic spatial disparity. This paper attempts to analyze the effect of the heterogeneous labor migration on the regional income disparity theoretically and empirically by introducing the labor homogeneity. The theoretical meaning of this paper is to illustrate the internal mechanisms between the heterogeneous labor migration and the regional income disparity by constructing a spatial equilibrium model of them. The research area about the new economic geography is developed. The empirical meaning of this paper is to properly understand the internal relationship between the heterogeneous labor migration and the regional income disparity and provide some policy instructions to the government on the regional economic plan and labor migration.Theoretical research is the basis of this paper. Based on the new economic geography, this paper constructs an endogenous model about the heterogeneous labor migration, agglomeration and regional income disparity. Due to the introduction of labor heterogeneity, the spatial equilibrium condition which was in previous studies for the heterogeneous labor migration and agglomeration has changed and cased the regional disparity. Based on this model, this paper analyzes the following relationships: First, the relationship between the heterogeneous labor migration and agglomeration is analyzed. The skilled migration generates stronger agglomeration forces than the unskilled. When the transport cost reduces, due to increasing return, monopolistic competition and human capital externalities, the skilled obtain the agglomeration forces in the first place and the industry agglomerates in the same place. The wage in this place increases and the market potential rises as well, which in turn promotes the industrial agglomeration and eventually become a core-periphery equilibrium. With the transport cost reducing, the unskilled can also generate the agglomeration effects. Second, the relationship between agglomeratin and regional income disparity is analyzed. The welfare analysis on different equilibriums conditions shows that the income in the core is higher than the periphery and there exists the income distance between the core and the periphery. When the transport cost reduces, the industrial distribution changes from the symmetry to the agglomeration, which is consistent with the social welfare maximum. While under the core-periphery condition, because of the variety of the manufacturing products and low transport cost, the income per worker is higher in the core than in the periphery and there exists the income gap between the core and the periphery. Third, this paper also analyzes the effect of the heterogeneous labor migration on the regional income disparity. If the unskilled mobility is prohibited, then the skilled migration will result in local agglomeration and widens the regional income disparity. On the contrary, if the skilled mobility is prohibited, then the unskilled migration will result in the low-level agglomeration and alleviate the regional income disparity.Empirically, this paper examines the relationship between the heterogeneous labor migration, agglomeration and the regional income disparity by using the provincial level data in China. Firstly, we divide the circular effects caused by the heterogeneous migration into forward and backward linkage effects. This is aims to analyze whether the migration is affected by the regional market size and whether the heterogeneous labor wage level is determined by the regional market size, which can be measured by the local market potential index. Secondly, through examining the recent trend of the industrial agglomeration and regional income disparity in China, we conduct a relevant analysis of the industrial agglomeration and regional income disparity. The main empirical results are following. The Chinese migration is affected both by the local market potential and the human capital stock. The higher the market potential index and the human capital stock, the higher labor inflow probabilities. This confirms the forward linkage between the heterogeneous migration and agglomeration. The backward linkage between the heterogeneous migration and agglomeration is also confirms. And such effect is on a rising trend. The higher the market potential index and local market demand, the higher labor wages. The linkage between the skilled wage level and the local market potential is stronger than the unskilled wage level. Moreover, more and more industries, especially the hi-tech industries, agglomerate in the East. And the income disparity between the inland and the coast is increasing. The main source of this disparity is the gap between the inland and the coast. The industrial agglomeration and the regional disparity appear to be highly correlated.Finally, this paper illustrates the general trends of heterogeneous migration and regional income, and also provides some policy implications and suggestions.