The Economic Analysis Of Rural Surplus Labor In Supply Decided And In Demand Constraint Economies

To all countries, it is not only an inevitable trend of industrialization and modernization for surplus rural labor to move to non-agricultural industries and to cities and towns, but also an important political and economical issue. With the implementation of the political and economic reform, our country enters into a new quick stage to surplus rural labor migration. After more than 20 years development, until the end of 2005, the composition of primary industry product to Gross Domestic Product and Composition in Percentage of primary industry have drop to 12.6% and 44.8%. But even this, based on Cai there are more than 100 million rural surplus labor still. If we consider one in rural is a surplus rural labor, when his wage from primary industry work is lower than in urban migration wage. Then the amount will be more immense. So it must be a long process to solve the problem.With the development of the economics and the scale of product and capital expand, china has say goodbye to the shortage economy, the limited market demand turn into an important restrict factor of economic growth. Unfortunately, with the rural labor migration, it's impossible to keep a low migration wage. So, We have to confront with a problem of higher labor price. Then, on one hand, we have take the employment pressure of rural surplus labor, on other hand, we have to face up the foreign market demand shock caused by the higher labor price. It's difficult to interpret the phenomena by Classical and Neo-Classical economics. So in this article I will introduce deficiency of effective demand to study the migration problem in our country.At first, we will have a simply review by Developmental Economics theory, included classical model, Lewis-Fei-Rains model, and Neo-Classical Jorgenson, Harris-Todaro theory. It is also included Rakshit model which consider Keynes's ideas.In the third part of this article I will borrow ideas from other countries' experience of rural surplus labor migration pattern, based on the theory in part one, to divided china's development history into three stages. And then draw a conclusion only by industrial sector's "capital accumulation→the migration of rural surplus labor→capital accumulation→the migration of rural surplus labor" way, we can not solve the migration problem in our country.In the fourth part, I will have further econometric analysis on the four stages dividend by part three, to find out the effect of supply decided and demand restrict. In this section, we will concentrate on the ratio of newly increased capital to immigration labor. When an economy is supply decided, because of unlimited rural surplus labor, the capital is relative scare. Then the economy will develop with labor intense. But if demand restrict become an important factor to economic growth, before migration have done, the capital is relative surplus. Then the price of capital will drop down, so the ratio of the newly increased capital to immigration labor will rise up.In the following part, I will introduce the history surplus rural labor migration to get some helpful thought and way suitable for our country.In the last part, in the situation of supply decided and demand restrict exist at the same time, find a way to develop our economy. Base on relative theory and foreign experience, I will give some suggestions to solve the problems of rural surplus labor migration in new situation.