The New Rural Cooperative Medical Scheme and Its Implications on Rural Labor Migration in China: Evidence from Longitudinal Surveys*

Qin Xuezheng 1 and Zheng Zhi 2
1School of Economics, Peking University, Beijing, China
2Guanghua School of Management, Peking University, Beijing, China

 
Abstract: In 2003, China initiated the New Rural Cooperative Medical Scheme (NRCMS) in order to provide basic health care coverage for the rural population. However, the NRCMS has had a marked impact on rural-urban labor migration as its current regulations present a barrier for cross-region participation in the NRCMS, and its reimbursement system is biased when the enrollees seek medical services outside their location of hukou, a household registration system in China. This paper performs a variety of empirical tests on a panel data set from the China Health and Nutrition Survey (CHNS) to study how the NRCMS affects rural residents’ work location choices. We observed a “locking effect” on potential rural migrant workers and a “pulling effect” on existing ones. According to the results, the NRCMS has discouraged rural residents from working outside their location of hukou, lowering the probability of relocation by 3.52 percent. Meanwhile, the NRCMS system actually encourages existing migrant workers to return home. This paper concludes that the NRCMS has to some extent restrained the free flow of the labor force and exacerbated the migrant worker shortage.
Key words: New Rural Cooperative Medical Scheme, rural labor migration, locking effect, pulling effect

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