Contemporary Finance & Economics ›› 2026, Vol. 0 ›› Issue (7): 3-17.

• Theoretical Economics •     Next Articles

Removing the Labor Market Obstacles: Provincial Boundaries, Culture and Geography

Wei Dong-xia1, Lu Ming2   

  1. 1. Guangdong University of Finance, Guangzhou 510521, China;
    2. Shanghai Jiaotong University, Shanghai 200030, China
  • Received:2026-02-14 Revised:2026-06-02 Online:2026-07-15 Published:2026-09-14

Abstract: Removing the obstacles of migration is most significant for a unified market. Lacking the inter-temporal assessment of migration obstacles, people observed that the inter-provincial population mobility is weakening. Based on the census data from year 2000 to 2015, the division of provincial boundaries significantly reduced the scale of migration between cities, and its effects tended to be enhanced. Dialects, natural geography, and distance also acted as barriers to population movement. The weakening of inter-provincial labor mobility is essentially the result of the inter-provincial labor market integration lagging behind within-provincial integration. For example, the unified pension insurance system in the population-outflow provinces significantly reduced the probability of inter-provincial mobility, while the high threshold for getting hukou in inflow cities strengthened the segmentation effect of provincial boundaries. Although the development of the tertiary industry in the inflow city weakened the effect of provincial boundary barriers, it strengthened the blocking effect of dialects on population mobility. The above analysis indicates that provincial boundaries, dialect differences and geographical distances between city pairs widened their income gaps. With the aim of narrowing the income gap between regions, we must build consensus and further smooth the flow of labor across provinces.

Key words: unified labor market, provincial boundary, labor mobility, income gap

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