Impact of relaxing internal-migration restrictions on agricultural TFP of rural households: evidence from China

In this paper, we study how a significant relaxation of internal migration restrictions affects the agricultural total factor productivity of rural households, taking advantage of the 2014 Hukou reform in China. This reform completely removed the migration restrictions for cities with an urban population of less than 0.5 million (towns and small cities) but left the migration restrictions in megacities unchanged. We find that the reform has significantly contributed to the off-farm transfer of rural labour and increased the agricultural TFP of rural households. Further mechanistic analysis shows that the reform increased the level of agricultural mechanization of rural households and facilitated the subcontracting of land by low productivity farmers.