Rural-urban disparity and sectoral labour allocation in China

This study 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 rural-urban consumption and income differentials decreased between 1978 and 1985, but then have continually increased...

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Bibliographic Details
Published in:The Journal of development studies 1999-02, Vol.35 (3), p.105-133
Main Authors: Tao Yang, Dennis, Zhou, Hao
Format: Article
Language:English
Subjects:
Agriculture
Allocation
China
China, People's Republic of
Consumption
Development strategies
Economic reform
Expenditures
Factors
Financial policy
Households
Income Inequality
Labor
Labor economics
Labor market
Labor Productivity
Labour force
Labour productivity
Peoples Republic of China
Per capita
Policy Reform
Prices
Production functions
Productivity
Public policy
Ratios
Rural areas
Rural Government
Rural Urban Differences
Social Segmentation
Stagnation
Subsidies
Trends
Urban Affairs
Urban areas
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Summary:This study 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 rural-urban consumption and income differentials decreased between 1978 and 1985, but then have continually increased to historically high levels. This sectoral division is consistent with production function estimates based on provincial data that reveal higher labour 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 to an efficient sectoral allocation of labour have prevented China from eliminating dualism. Recent financial policies consisting of urban price subsidies and increased investment credits have also had influential distribution effects that are biased against the rural sector.
ISSN:0022-0388
1743-9140
DOI:10.1080/00220389908422575