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Opening of China's Trade, Labour Market Reform and Impact on Rural Wages

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  • Colin A. Carter
  • Andrew J. Estrin

Abstract

Government policy in China supports urban wages at the expense of returns to farm labour. A model is developed to estimate how WTO accession and complementary labour market reform will influence factor returns in China. With WTO membership, a larger cut in manufacturing tariffs compared to agriculture will improve agriculture's terms of trade and will raise the agricultural wage. Complementary labour market reforms will further boost farm wages as labour exits agriculture in large numbers. We estimate that WTO membership and complementary labour market reforms will result in a decline in the agricultural labour force by about 25 per cent. Copyright Blackwell Publishing Ltd 2005.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal The World Economy.

Volume (Year): 28 (2005)
Issue (Month): 6 (06)
Pages: 823-839

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Handle: RePEc:bla:worlde:v:28:y:2005:i:6:p:823-839

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  1. John Knight & Lina Song, 2003. "Increasing urban wage inequality in China," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 11(4), pages 597-619, December.
  2. Anderson, Kym, 1993. "Lobbying Incentives and the Pattern of Protection in Rich and Poor Countries," CEPR Discussion Papers 789, C.E.P.R. Discussion Papers.
  3. Yang, Dennis T. & Hao Zhou, 1997. "Rural-Urban Disparity and Sectoral Labor Allocation in China," Working Papers 97-02, Duke University, Department of Economics.
  4. Elena Ianchovichina & Will Martin, 2004. "Impacts of China's Accession to the World Trade Organization," World Bank Economic Review, World Bank Group, vol. 18(1), pages 3-27.
  5. Colin A. Carter, 1997. "The Urban-Rural Income Gap in China: Implications for Global Food Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(5), pages 1410-1418.
  6. John Gilbert & Thomas Wahl, 2002. "Applied General Equilibrium Assessments of Trade Libereralisation in China," The World Economy, Wiley Blackwell, vol. 25(5), pages 697-731, 05.
  7. Bhattacharyya, Arunava & Parker, Elliott, 1999. "Labor productivity and migration in Chinese agriculture A stochastic frontier approach," China Economic Review, Elsevier, vol. 10(1), pages 59-74.
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