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Could somebody with a background in economics explain to me why hukou was introduced in the first place?

Why couldn't they let natural market forces determine where people stay. And why would it cost 240 billion to change this? Is that how much covering everybody's medical, insurance, and all that stuff cost?

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It was the same way in the USSR. Moscow and St. Petersbrug were significantly more habitable. If you were going to find goods in the USSR it was going to be in Moscow. In parallel many Russian cities of 100,000 were inhospitable, isolated, and dull places. Nevertheless Russia is a large country and if free travel was allowed key industries such as mining or wheat production would disappear. In modern Russia large areas that were cultivated in Soviet times (due to this system) remain underutilized. Lastly finding work was never a problem in the USSR and hence anybody transferring would be likely to find work as long as they were a legal resident (not working was criminal). To counter any potential demographic shift the Soviet authorities made it difficult to move from rural area to the city. A similar system existed in China.

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