The Quantitative Study Of China’s Dual Economic Structure Transformation And Rural Labor Transfer

The Third Plenary Session of the18th CPC Centeal Committee points out that the existing urban-rural dual structure is a main obstacle to integrated developmentMigration of rural labor to urban areas is an important way to break the urban-rural dual structure. Since the reform and opening, the amount of labor migrated from rural to urban has reached an unprecedented scale.According to the2012national monitoring report of migrant workers, the number of migrant workers reached262million in2012.With the expanding scale of rural labor transfer, the eastern coastal areas appeared the phenomena of migrant workers shortage in2004. And then labor shortage began to spread out to the inland labor export provinces and erupted nationwide. Migrant wages started to rise. Large-scale transfer of rural labor has a tremendous shock and profound impact on social stability, economic development and reform in China. Changes in China’s labor market supply and demand mean that the dual economic structure transformation characterized by transfer of rural surplus labor force enters into a new era. Therefore, judging the process of dual economic restructuring to accelerate the transformation of dual economic structure and smooth the period of prominent contradictions of the dual economic becomes the challenge faced by academics policy makers.In this paper, we analyze China’s dual economic structure transformation and the process of rural labor transfer from the theoretical and practical aspects by quantitative and qualitative methods using micro and macro data. And this paper further studies the factors that promote the acceleration of China’s dual economic structure transformation through shifting rural labor force. The main work and conclusions are as follows:Firstly, from the macro perspective, we establish econometric models from aspects of agriculture and labor-intensive industry to demonstrate and test the labor market structural transformation of China as well as its eastern, central and western regions based on the Lewis-Ranis-Fei model of the dual economic structure transformation theory.Nationally, the marginal products of agricultural labor changes from negative to positive in2006and it is still less than the agricultural wage. The labor supply curves of manufacturing and construction have faced upward raked after2004. In addition, we calculated China’s urban and rural Gini coefficient. The national and urban Kuznets curves appear the turning point of Kuznets inverted U-curve around2006. Based on the above findings, this paper argues that China’s dual economic structure has experienced changes in stages. In other words, China has passed the first Lewis turning point (shortage point) and entered the stage of labor force limited supply after2006From regional perspective, the marginal products of agricultural labor of representative provinces in eastern and central areas change from negative to positive in2003and2006separately, and both of them are less than the agricultural wages of corresponding region. The marginal products of agricultural labor in western region are near zero. That is to say, the western region is still wandering around the Lewis first turning point. From manufacturing and construction labor supply models, we can clearly see that the manufacturing wage of eastern region rises the fastest, and the construction wages of central and western regions rise faster than the east. Industry wage changes have regional characteristics. So, Eastern and central regions crossed the first Lewis turning point in2003and2006respectively, and enter in the Lewis turning stage. The western region doesn’t cross the shortages point. The dual economic structure transformations of eastern, central and western regions have differences in time and process.Secondly, this paper turns to the microeconomic evidence of dual economy structure transformation in China from the perspectives of migrant wage and marginal product of labor in the agricultural sector by using micro survey data.Results of panel data model considering selection and unobservable heterogeneity show that individual’s characteristics affect the wages of migrant workers, and specifically education is endogenous and is the important factor affecting migrant wages.Besides, real migrant wage has an obvious upward trend after2006controlling other factors that impact real migrant wages. Migrant labor force has been in short supply in the city since then.Estimation output of family agricultural output curve shows that the marginal product of labor in agriculture is still lower than the wage of labor in rural family and much lower than agricultural workers’ wage, so there is surplus labor force in rural area.Moreover, the wage of labor in rural family is less than agricultural workers’wage, which suggests that China’s current agricultural modernization management level is not high. And, the representation of rural surplus labor is time remaining.Urban area has experienced labor shortage since2006and rural area still has surplus labor force. All these are evidences to support that China has entered the Lewis Turning Stage which is between Shortage Point and Commercialization Point after2006. Thirdly, based on the theory of location choice of labor, this paper empirically studies the influence of labor transfer on the rural residents’ income and its change by Treatment Effect Model which can revise the bias of labor’s location choice using micro survey data.Labor transfer increases the rural residents’ income. The increase effect of labor transfer on income was the highest in1993, and then it appeared a downward trend. After the shortage of migrant workers in2004, the increase effect began to raise gradually, which reflected the interactive relationship between labor transfer and income gap.The labor’s self-selection of location is significant in the income equation, so the analysis of the various effects of labor transfer from the microscopic view should consider the labor’s self-selection bias. Moreover, the high school and vocational education are the important factors affecting rural residents’ income and their influence on income rises gradually.Fourthly, based on the labor market segmentation theory, we study the dynamic changes of income gap and its influencing factors between China’s urban unskilled workers and migrant workers by JMP dynamic decomposition method using micro data.From the static perspective, wages of urban unskilled workers were higher than migrant workers during the sample period, but after2004the gap between the two has narrowed.The results of JMP show that the total income gap due to the household registration system is narrowing. That is, the reduction of discrimination reduces the income gap owing to the household registration system. And endowments and their prices components have the same effect, but the effects of different characteristics have heterogeneous. In particular, we first find that among the effects of endowments, the improvements of individual characteristics and education of migrant workers lower the income inequality, while changes in position gap of the urban workers and migrant workers widen the income gap. Second, Changes in the returns of endowment characteristics or the reductions of the observable individual characteristic premiums contribute to the decline in income gap. Finally, the change of gap effect in discrimination components, or the rise of status of migrant workers in urban has played a significant role in reducing the income gap attributed to household registration system.Fifth, this paper analyses the factors of China’s labor migration based on the Todaro mode and the framework of comparative advantage analysis by switching regression model with endogenous switching.This part gives the microscopic mechanism to further promote China’s labor transfer.By adding endogenous selectivity into the income equation, we estimate the structural equations which contain decision equation, transfer and non-transfer income equations using a two-stage approach which can effectively correct selection.It turns out that expected income gap is the most important factor that affects China’s rural-urban labor immigration, which support Todaro’s analysis framework that labor transfer is the reaction of expected income gap. The number of family labor significantly affects the transfer propensity, reflecting rural household’s role of labor allocation.The estimated income equations have very strong evidence of self-selection. So when we estimate the income equations of transfer or non-transfer using micro data, the problem of self-selection should be considered. Self-selection has positive impact on expected income. Hence, labor transfer increases the income of rural labor force and narrows the income gap between the urban and the rural in a certain extent Furthermore, Education is an important factor which impacts the income of Chinese rural labor force. Estimated results also show that the overall quality of the current farm labor in rural areas is lower than the transfer labor with the continuous transfer of rural labor to urban, and this will affect agricultural production and endanger food security.In summary, this paper verifies that China’s economic development has crossed the first Lewis turning point from the macro and micro aspects. But there are differences in the development stage among eastern, central and western regions, and the western region is relatively behind the national level. From the perspective of changes of income gap in the dual economic structure transformation, the national and urban Kuznets curves appear the turning point of Kuznets inverted U-curve. On the micro level, Labor transfer improves the income of farmers, and the income gap between migrant workers and urban workers appears narrowing trend. Those results indicate that labor transfer has started to play a role of reducing the income gap between urban and rural gradually in China under the dual economic structure, and also reflect that the dual economic structure transformation has phase change in our country.The current dual economic structure transformation has entered a critical period in our country and the resource constraints such as capital and labor of economic development will radically change, so the economic development policy should be synchronous adjustment. At last, we study the influence factors which can accelerate the transformation of dual economic structure in China. The results show that rural labor force still has potential to transfer.Therefore, government should raise the status of migrant workers in the urban labor market, and accelerate the process of migrant workers’citizenship. At the same time, we should increase the degree of agricultural modernization to ensure the safety of food and increase rural education investment to provide talent support for dual economic structure transformation and industrial structure upgrading in our country.