Effect of Urban Household Registration Controls on Labor Mismatch in China

Abstract

This study examines the effect of the degree of household registration control on labor mismatch in China. Based on Chinese urban panel data, we construct a dynamic panel model to empirically examine the effect of the degree of household registration control on labor mismatch in China. The study finds that labor mismatch relatively exists in all regions of China, which differ significantly. Moreover, liberalizing the household registration system in cities with under- and over-allocated labor force can reduce and aggravate the degree of local labor mismatch, and improve and reduce resource allocation efficiency, respectively. This study uses the labor distortion coefficient to replace the original dependent variable, and the labor mismatch coefficient. The authors further conduct a robustness test using the system generalized moment estimation method. These results are consistent. The implication of this study is that, in the context of China’s shift from high-speed to high-quality development, local governments should tailor their household registration system reform programs to the local resource allocation situation to improve the degree of labor mismatch in China, to optimize resource allocation, and to promote economic transformation.