PEPP Seminar (Nov 26th, 2024): “Rural-urban migration and the effect of government spending in developing countries” by Prof. Jingchao Li
2024/10/30
By Prof. Jingchao Li (Assistant professor, School of Business, East China University of Science and Technology)
Time: 16:45~18:15
Title: “Rural-urban migration and the effect of government spending in developing countries”
Format: Online (Zoom)
Zoom Link (pre-registration required):
https://us06web.zoom.us/meeting/register/tZwucOmorT0iGtS3DlSHwP5I-L6tTUlVsmGZ
Abstract: We examine whether government spending could enhance its expansionary effect by encouraging rural-urban migration in developing countries. We answer this question using Chinese data because there are a huge rural population and large urban-rural gaps in productivity and wage due to migration costs in China. The empirical evidence shows that there is a delayed rural-urban migration of labor in response to an increase in government spending. We then derive a two-region dynamic general equilibrium model where government spending shocks influence output within and across regions. We find that the effects of government spending are substantially amplified by the rural-urban migration channel.
