Migrants and Firms: Evidence from China br

How does rural-urban migration shape urban production in devel-oping countries? We use longitudinal data on Chinese manufactur-ing firms between 2000 and 2006, and exploit exogenous variation in rural-urban migration induced by agricultural income shocks for identification. We find that, when immigration increases, man-ufacturing production becomes more labor intensive and produc-tivity declines. We investigate the reorganization of production using patent applications and product information. We show that rural-urban migration induces both labor-oriented technolog-ical change and the adoption of labor intensive product varieties. (JEL D24, L23, L60, O33, P25, P31, R23)