12 Jan 2015

Expropriation with Hukou Change: Evidence from a Quasi-Natural Experiment

Mehtap Akgüç / Xingfei Liu / Massimiliano Tani


This paper was published by the Institute for the Study of Labor (IZA) in Bonn as Discussion Paper No. 8689 in December 2014.

It examines the labour market outcomes for males aged 18-60 obtaining an urban ‘hukou’ (household registration system) as a result of land expropriation across a number of provinces in China. Using 2008 and 2009 RUMiC data pooling urban, rural and migrant samples, the authors find that those obtaining an urban hukou have better labour market outcomes than rural stayers and migrants, and close the gap vis-à-vis native urbanites. They also find that children of families experiencing a hukou change due to expropriation have similar investment in human capital as the children of native urban hukou holders. The results confirm the hukou status as a strong economic determinant of labour market outcomes and as a source of inequality. Differences in educational investment, regardless of the differences in parental background, appear however to disappear for the children of families experiencing expropriation, suggesting that levelling the hukou status amongst children in urban areas may be a first step towards reducing intergenerational inequality.

Mehtap Akgüç is a Research Fellow at CEPS and IZA; Xingfei Liu is at IZA and Massimiliano Tani is at the University of New South Wales and IZA.