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Rural-Urban Disparity and Sectoral Labor Allocation in China

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Author Info
Yang, Dennis T.
Hao Zhou

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Abstract

This paper examines China's rural-urban segmentation and its causes in the context of economic reforms. Household survey and aggregate data indicate a V-shaped process in which the rural-urban consumption and income differentials decreased between 1978-85, but then have continually increased historically high levels. This sectoral division is consistent with production function estimates based on provincial data that reveal higher labor productivity in urban/state-owned industries than in rural industries and agriculture. To explain the V-shaped change, we argue that the precedent of successful rural reforms raised farmers' relative earnings, but the remaining obstacles for an efficient sectoral allocation of labor have prevented China from eliminating dualism. The recent financial policies consisting of urban price subsidies and increased investment credits have also had influential distribution effects biased against the rural sector.

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Publisher Info
Paper provided by Duke University, Department of Economics in its series Working Papers with number 97-02.

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Date of creation: 1997
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Publication status: Published in JOURNAL OF DEVELOPMENT STUDIES, Vol. 35, 1999, pages 105-133
Handle: RePEc:duk:dukeec:97-02

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Find related papers by JEL classification:
O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
P21 - Economic Systems - - Socialist Systems and Transition Economies - - - Planning, Coordination, and Reform
O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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  1. Alan de Brauw, 2002. "Are Women Taking over the Farm in China?," Department of Economics Working Papers 199, Department of Economics, Williams College. [Downloadable!]
  2. Fan, Shenggen & Chan-Kang, Connie & Mukherjee, Anit, 2005. "Rural and urban dynamics and poverty: Evidence from China and India," FCND discussion papers 196, International Food Policy Research Institute (IFPRI). [Downloadable!]
  3. Shi, Anqing, 2006. "Migration in towns in China, a tale of three provinces : evidence from preliminary tabulations of 2000 census," Policy Research Working Paper Series 3890, The World Bank. [Downloadable!]
  4. Shen, Ling, 2005. "Inequality and growth: A joint analysis of demand and supply," Proceedings of the German Development Economics Conference, Kiel 2005 30, Verein für Socialpolitik, Research Committee Development Economics. [Downloadable!]
  5. de Brauw, Alan & Huang, Jikun & Rozelle, Scott & Zhang, Linxiu & Zhang, Yigang, 2002. "The Evolution Of China'S Rural Labor Markets During The Reforms," Working Papers 11984, University of California, Davis, Department of Agricultural and Resource Economics. [Downloadable!]
    Other versions:
  6. Terry Sicular & Yaohui Zhao, 2002. "Earnings and Labor Mobility in Rural China: Implications for China's WTO Entry," University of Western Ontario, RBC Financial Group Economic Policy Research Institute Working Papers 20028, University of Western Ontario, RBC Financial Group Economic Policy Research Institute. [Downloadable!]
  7. Rozelle, Scott, 2001. "Trade And Investment Liberalizastion And China'S Rural Economy: Impacts And Policy Responses," Working Papers 11959, University of California, Davis, Department of Agricultural and Resource Economics. [Downloadable!]
  8. Lohmar, Bryan, 1999. "Land Tenure Insecurity And Labor Allocation In Rural China," 1999 Annual meeting, August 8-11, Nashville, TN 21495, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  9. Zhong Zhao, 2005. "Migration, Labor Market Flexibility, and Wage Determination in China: A Review," Labor and Demography 0507009, EconWPA. [Downloadable!]
  10. Dennis Tao Yang, 1999. "Urban-Biased Policies and Rising Income Inequality in China," American Economic Review, American Economic Association, vol. 89(2), pages 306-310, May. [Downloadable!] (restricted)
  11. Glauben, Thomas & Herzfeld, Thomas & Wang, Xiaobing, 2005. "Labor Market Participation of Chinese Agricultural Households," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24516, European Association of Agricultural Economists. [Downloadable!]
  12. Lohmar, Bryan & Rozelle, Scott & Zhao, Changbao, 2000. "The Rise Of Rural-To-Rural Labor Markets In China," Working Papers 11955, University of California, Davis, Department of Agricultural and Resource Economics. [Downloadable!]
  13. Sicular, Terry & Yue, Ximing & Gustafsson, Bjorn & Li, Shi, 2006. "The Urban-Rural Income Gap and Inequality in China," Working Papers RP2006/135, World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
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  14. Zhang, Xiaobo & Tan, Kong-Yam, 2007. "Incremental Reform and Distortions in China’s Product and Factor Markets," MPRA Paper 6804, University Library of Munich, Germany. [Downloadable!]
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  15. Deng Quheng & Bjorn Gustafsson, 2006. "China’s Lesser Known Migrants," IZA Discussion Papers 2152, Institute for the Study of Labor (IZA). [Downloadable!]
  16. Shujie Yao & Genfu Feng & Aying Liu & Guohua Fu, 2005. "On China's rural and agricultural development after WTO accession," Journal of Chinese Economic and Business Studies, Taylor and Francis Journals, vol. 3(1), pages 55-74, January. [Downloadable!] (restricted)
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