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Labor Mobility Barriers and Agricultural Productivity in China: Analysis Based on a General-Equilibrium Roy Model

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Listed:
  • Lili Wang

    (School of Economics, Nankai University)

  • Xue Qiao

    (School of Economics, Renmin University of China)

  • Jidong Chen

    (School of Public Policy and Management, Tsinghua University)

Abstract

With sustainable economic growth and structural transformation, labor productivity in China's agricultural sector has gradually improved. However, significant gaps remain compared to the nonagricultural sector and agriculturally advanced economies. To explain these disparities in sectoral productivity, we develop a two-sector general-equilibrium Roy model incorporating mobility barriers, such as China's hukou policy. These barriers result in labor without comparative advantages in agriculture being trapped in the agricultural sector, which lowers both the quality of labor and productivity in agriculture. Additionally, the phenomenon of insufficient per capita arable land further hampers the growth of agricultural labor productivity. We then calibrate the model's parameters using sector-level data and conduct quantitative analysis. The results show that the mobility barrier across sectors declines between 2002 and 2021, which explains 28% of the rise in the agricultural labor productivity of China. These findings underscore the importance of further reducing labor mobility barriers to promote the improvement of agricultural productivity and accelerate urban-rural integration.

Suggested Citation

  • Lili Wang & Xue Qiao & Jidong Chen, 2023. "Labor Mobility Barriers and Agricultural Productivity in China: Analysis Based on a General-Equilibrium Roy Model," Annals of Economics and Finance, Society for AEF, vol. 24(2), pages 377-399, November.
  • Handle: RePEc:cuf:journl:y:2023:v:24:i:2:wangqiaochen
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    References listed on IDEAS

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    More about this item

    Keywords

    Mobility barrier; Labor selection; Agricultural productivity;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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