Endogenous mobility frictions and college entrance examination policies: A spatial equilibrium analysis

This paper takes the college entrance examination (gaokao) as the starting point and demonstrates that the differences in gaokao admission rates among regions influences the settlement difficulty for migrants significantly. It means that cities with higher admission rates set higher settlement thresholds for migrants. Through constructing a spatial overlapping generations model, this paper illustrates that urban areas setting higher admission thresholds for migrant children not only reduce their opportunities to access high-quality education but also lower their willingness to migrate to cities. From the perspective of incompatible incentives between central and local governments, this paper endogenizes the behavior decisions of governments and elucidates how local governments, increase the settlement threshold for migrants, deviating from the central government's optimal behavior. Based on the spatial equilibrium model and estimated parameters, we quantitatively analyze the impact of university expansion and household registration discrimination on settlement probabilities and residents' welfare. The results indicate that university expansion increases the settlement probability for migrants and has a positive effect on the welfare level of all kinds of residents.