Does the Inflow of Rural-to-Urban Migration Increase Firms’ Productivity?

Our study examines whether the inflow of rural-to-urban migration increases the productivity of manufacturing firms in China, using cross-sectional data from the 2005 China 1% Population Survey and the Annual Survey of Industrial Firms. The analysis accounts for firm heterogeneity—including ownership, export orientation, and industry type—and explores the moderating role of regional minimum wage policies. The results indicate that the inflow of rural-to-urban migration significantly enhances firm productivity through agglomeration effects, technological efficiency, and cost advantages, and the findings remain robust under alternative specifications. Productivity gains are most pronounced among private, non-exporting, and technology-intensive firms, while the effects are weaker or insignificant for state-owned and exporting firms due to higher skill requirements and labor mismatches. At the regional level, moderate minimum wage standards amplify the productivity benefits of migration, whereas higher wage levels reduce cost advantages. These results highlight that the productivity effects of rural-to-urban migration are context-dependent—shaped by firm characteristics and regional wage settings. The study contributes new empirical evidence to the international literature on labor mobility and sustainable industrial productivity and provides policy insights aligned with the United Nations Sustainable Development Goals, emphasizing differentiated regional and sectoral strategies for inclusive and sustainable growth.