A Study Of The Impact Of Labor Reallocation On Economic Growth

Nowadays, there is seirous deviation between employment structure and output structure in China and the deviation would inevitably lead to inequality between the marginal outputs of different sectors. So the reallocation of labor resources could increase output without adding any input. It is significant to study the impact of labor reallocation on economic growth in China, the quantification of the labor market disequilibrium and the viscosity of labor market.This paper dynamically research the contribution of labor shifts among various industries, especially the shifts of surplus agricultural labor to economic growth, and estimate the equilibrium wage rates of various sectors, the labor market viscosity coefficient and the practical wage rates between different sectors at the assumptions of the disequilibrium and the viscosity of labor market. First, we review the related literature about labor reallocation and economic growth. Second, employment structure and income per capita in China are analyzed at the perspective of time and spatial, and the relationship between employment structure and income per capita income in the whole world is analyzed correspondingly. Third, at the basis of the existing dual economic theory, we construct the two sectors model and the three department model that can be used to analyze the effects on economic growth from changes in labor structure. Fourth, using the provincial data in China from1993to2009, we make empirical analysis using the theoretical model mentioned above, and estimate the contribution of labor shift to economic growth, the wage rate between the various sectors under balanced situation, the viscosity of the labor market and the practical ratio of real wages in different sectors. Finally, we made a brief analysis of agricultural policy and labor policy in China and put forward corresponding suggestion, concluding the paper and proposing research prospect.The conclusion of this paper are:the contribution of the capital growth per capita to the income growth per capita is between40%and50%; the contribution of the human capital growth per capita to the income growth per capita is from10%to14%; in the two sectors model, the contribution of the structural changes on the income growth per capita is between1.6%and2.3%; and in the three sectors model, the contribution of the structural changes on the income growth per capita is from5%to17.7%; the contribution of the net factor productivity growth on income growth per capita is between30%and37%. Furthermore, in equilibrium, the wage ratio of non-agricultural labor sector and agricultural labor sector is1.41; the wage ratio of the primary industry and the second industry is0.83; the wage rate of the tertiary industry and the second industry is1.31; the velocity of labor shifts from agriculture sector to non-agricultural sector is2.53; the velocity of labor shifts from the primary industry to the second industry is2.47; the velocity of labor shifts from the second industry to the tertiary industry is96.36. At the general tendency of labor shifts, the wage ratio of non-agricultural sector and agricultural sector is1.65; the wage ratio of the primary industry and the second industry is0.77; the wage rate of the tertiary industry and the second industry is1.32. We believe that, from these data, developing agriculture, adjusting the industrial structure and constructing labor market is the current policy approach to be taken.The innovation of this paper are:in non-balanced condition, we construct the two sectors model and the three department model; estimate the contribution of employment structural changes to the economic growth; estimate the practical wages ratio among various sectors; estimate the viscosity (velocity rate) of the labor market; estimate the equilibrium wage rates in various sectors.