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Labor Market Distortions, Rural-Urban Inequality and the Opening of China’s Economy

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Author Info
Zhai, Fan
Hertel, Thomas
Wang, Zhi

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Abstract

This paper evaluates the impact of some key labor market reforms on rural-urban inequality and income distribution, using a household-disaggregated, recursive dynamic computable general equilibrium (CGE) model of China. We also explore how these factor market reforms interact with product market reforms currently underway as part of China’s WTO accession process. The simulation results show that the reforms in rural land rental market and Hukou system, as well as increasing off-farm labor mobility would reduce the urban-rural income ratio dramatically. Furthermore, the combination of WTO accession and factor market reforms improves both efficiency and equality significantly.

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File URL: http://www.gtap.agecon.purdue.edu/resources/res_display.asp?RecordID=1323
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Paper provided by Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University in its series GTAP Working Papers with number 1323.

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Date of creation: 2003
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Handle: RePEc:gta:workpp:1323

Note: GTAP Working Paper No. 27
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  1. Yaohui Zhao, 1999. "Leaving the Countryside: Rural-to-Urban Migration Decisions in China," American Economic Review, American Economic Association, vol. 89(2), pages 281-286, May. [Downloadable!] (restricted)
  2. Anderson, Kym & Huang, Jikun & Ianchovichina, Elena, 2003. "Long-run impacts of China's WTO accession on farm-nonfarm income inequality and rural poverty," Policy Research Working Paper Series 3052, The World Bank. [Downloadable!]
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