Re‐examination of the surplus agricultural labour in China

Purpose - This paper aims to contribute to the pool of studies of rural underemployment in China. It is devoted to the conceptualization and measurement of surplus labour. Design/methodology/approach - The agricultural labour requirement function is estimated by the stochastic frontier analysis (SFA) with China's prefecture‐level data. Surplus labour or inefficient labour is obtained by subtracting the required labour from the actual labour participated in agriculture. Findings - The authors' analysis indicates that the existing size of agricultural surplus labour in rural China is still significantly large with the continued practice of the household registration system and China's WTO membership. However, the size has been decreasing over the last decade. Research limitations/implications - Quality of data might affect the authors' estimates. Practical implications - The phenomenon of the coexistence of surplus agricultural labour and shortage of workers in non‐agricultural production in urban China was discussed in line with the authors' research findings, as this has important impacts on the policies of rural industrialization in China. Social implications - This paper further argues that China is probably experiencing the second stage of the Lewis‐Fei‐Ranis dualistic economic framework. Originality/value - The authors' paper is probably the first to use prefecture data and SFA for panel data study of surplus agricultural labour in China. The analysis is essential to the understanding of the rural labour market during its rapid transition.