We study how a significant relaxation of internal migration restrictions affects labor market outcomes of incumbent migrants and natives, exploiting the 2014 hukou reform in China, which substantially removed the migration barriers of cities with an urban population below 5 million (nonmegacities). Using a difference-in-differences method, we find that migrants’ wages in nonmegacities experienced approximately a 2.6%–7.9% decline relative to that in megacities after the policy. The policy had nonnegative impacts on the wages of natives in nonmegacities. These results suggest that the downward wage pressure imposed by new migrants falls primarily on incumbent migrants rather than on natives.

We investigate how the presence of a college affects local educational attainment. As counterfactuals for current college locations, we use historical “runner-up” locations that were strongly considered to become college sites but were ultimately not chosen. We find that winning counties today have college degree attainment rates 56% higher than runner-up counties and more private-sector employment in human-capital-intensive industries. These effects are not driven primarily by recent in-migration of educated adults, and alternative public investments did not have similar effects on local educational attainment. The results indicate that colleges played an important role in shaping long-run local outcomes.