Frictional Sorting

Speaker：LIANG Wenquan（Associate Professor, Jinan University）

Host：HANG Jing, Associate Professor, Lingnan College

Time and Date：14:30, Mar. 24, 2023

Venue: Wang Daohan Conference Room(101), Lingnan Hall

Language: English + Chinese

Abstract:

In many countries around the world, constraints on mobility and housing supply interact with each other and combine to restrict workers’ location decisions. Using an equilibrium sorting model and rich micro data from China, we evaluate the impacts of these dual constraints on workers’ sorting behavior and quantify the resulting changes in their welfare and inequality. We find strong policy interactions between the two kinds of frictions in determining welfare losses and regional inequality. Counterfactual simulations show that lowering migration costs can increase welfare and reduce regional inequality by moving workers from unproductive inland regions to productive coastal regions in China; such welfare and spatial distributional impacts depend on the elasticity of housing supply in coastal regions. Similarly, the impacts of relaxing housing supply restrictions depend upon the constraints imposed on internal migration. Results highlight the policy complementarities between reducing the two kinds of frictions and have general policy implications.

Profile of the speaker:

Wenquan Liang is an associate professor of economics at Jinan University, Guangdong China. His fields of interest are Urban Economics, Labor Economics. His current research focuses on the consequence of institutions (such as, Hukou System, Land Use Regulation) on the spatial sorting with heterogenous skill types in China.