The massive population flow from rural to urban areas in post-reform China is the result of both institutional and structural changes caused by economic growth. In the planned economy, China had a household registration system (hukou system) which was designed to control population migration and labor mobility between rural and urban areas as well as across regions. The issuing of Regulations on Household Registration of the People’s Republic of China in 1958 marked the beginning of the formal establishment of the hukou system. Public security bureaus controlled place-to-place migration, and it was almost impossible to move from a rural to an urban area without authorized plans or official agreement. Departments of labor and personnel administration controlled the transfer of labor across economic sectors and there was no free labor market at all.
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