Hukou Constraint, Land Regulation, and Labor Spatial Allocation

The migrants usually need to bear two main costs: mobility cost and housing cost. In China, hukou constraint and land regulation affect labor migration through mobility cost and housing cost respectively, further affect labor spatial allocation and economic growth. We construct a spatial general equilibrium model of heterogeneous labor migration to quantify the effect of hukou reform and land regulation on labor spatial allocation. We find that the efficiency of labor spatial allocation in China contributes 1.67% to the annual aggregate economic growth (total is 9.08%) during 2000-2015. In counterfactual analysis, reducing hukou constraint in first-tier cities has the strongest effect on economic growth than other cities, but the relationship is inverted U-shaped; relaxing (strengthening) land regulation in first-tier and second-tier cities (third-tier and fourth-tier cities) can improve labor spatial allocation; the "joint change" of hukou constraint and land regulation has a better promoting effect on economic growth than the "separate change" of hukou constraint