Rural centralized residence and labor migration: Evidence from China

The rural centralized residence (RCR), a policy that guides rural households to reside in centralized residential communities or central villages, has been widely implemented in China and other developing countries to promote rural development. RCR can effectively improve local public facilities and stimulate more local business opportunities, thus affecting the migration decisions of rural household members. Using a large household-level survey data set from Sichuan province, China, we estimated the causal effects of RCR on rural labor migration via the instrumental variable approach while controlling for the within-town contiguous-villages group fixed effects. We found that on average the proportion of household members that are migrant workers decreases by 17.2 percentage points if households choose to embrace RCR. Additional analyses on the mechanisms indicate that RCR increases local employment opportunities, decreases search and transportation expenses for local jobs, and leads to increased satisfaction with local supporting facilities.