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

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  • Zhai, Fan
  • Hertel, Thomas
  • Wang, Zhi

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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Bibliographic Info

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. Ianchovichina, Elena & Martin, William, 2003. "Economic impacts of China's accession to the World Trade Organization," Policy Research Working Paper Series 3053, The World Bank.
  2. Shoven,John B. & Whalley,John, 1992. "Applying General Equilibrium," Cambridge Books, Cambridge University Press, number 9780521266550, April.
  3. 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.
  4. 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.
  5. Shaohua Chen & Martin Ravallion, 2004. "Welfare Impacts of China's Accession to the World Trade Organization," World Bank Economic Review, World Bank Group, vol. 18(1), pages 29-57.
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Cited by:
  1. Yinhua Mai & Xiujian Peng, 2011. "Labour Market Reform, Rural Migration and Income Inequality in China - A Dynamic General Equilibrium Analysis," Centre of Policy Studies/IMPACT Centre Working Papers g-221, Victoria University, Centre of Policy Studies/IMPACT Centre.
  2. Jing Cao, 2008. "A Dynamic Computable General Equilibrium Analysis of Environmental Taxation and "Rural-Urban" Migration Distrotions in China," EEPSEA Research Report rr2008011, Economy and Environment Program for Southeast Asia (EEPSEA), revised Jan 2008.
  3. Anping Chen & Nicolaas Groenewold, 2009. "Regional Equality and National Development in China: Is There a Trade-Off?," Economics Discussion / Working Papers 09-21, The University of Western Australia, Department of Economics.
  4. Wei Zou & Yong Liu, 2010. "Skilled Labor, Economic Transition and Income Differences: A Dynamic Approach," Annals of Economics and Finance, Society for AEF, vol. 11(2), pages 247-275, November.
  5. Ying Liang & Yingying Yi & Qiufen Sun, 2014. "The Impact of Migration on Fertility under China’s Underlying Restrictions: A Comparative Study Between Permanent and Temporary Migrants," Social Indicators Research, Springer, vol. 116(1), pages 307-326, March.
  6. Wang, Xiaobing, 2007. "Labor market behavior of Chinese rural households during transition," Studies on the Agricultural and Food Sector in Central and Eastern Europe, Leib­niz Institute of Agricultural Development in Central and Eastern Europe (IAMO), volume 42, number 92321.
  7. Anping Chen & Nicolaas Groenewold, 2009. "Reducing Regional Disparities in China: An Evaluation of Alternative Policies," Economics Discussion / Working Papers 09-06, The University of Western Australia, Department of Economics.
  8. Vennemo, Haakon & Aunan, Kristin & He, Jianwu & Hu, Tao & Li, Shantong & Rypd3al, Kristin, 2008. "Environmental impacts of China's WTO-accession," Ecological Economics, Elsevier, vol. 64(4), pages 893-911, February.
  9. Arvind Virmani, 2006. "China’s Socialist Market Economy - Lessons Of Success," Macroeconomics Working Papers 22274, East Asian Bureau of Economic Research.
  10. Lin, Justin Yifu & Martin, William J., 2009. "The Financial Crisis and Its Impact on the Global Agricultural Landscape," 2009 Conference, August 16-22, 2009, Beijing, China 53208, International Association of Agricultural Economists.
  11. Lu, Zhigang & Song, Shunfeng, 2006. "Rural-urban migration and wage determination: The case of Tianjin, China," China Economic Review, Elsevier, vol. 17(3), pages 337-345.
  12. Zhai, Fan & Hertel, Thomas W., 2009. "Economic and Poverty Impacts of Agricultural, Trade and Factor Market Reforms in China," Agricultural Distortions Working Paper 52787, World Bank.
  13. Li, Ji Feng & Wang, Xin & Zhang, Ya Xiong, 2012. "Is it in China's interest to implement an export carbon tax?," Energy Economics, Elsevier, vol. 34(6), pages 2072-2080.
  14. Yinhua Mai & Xiujian Peng & Peter B. Dixon & Maureen T. Rimmer, 2009. "The effects of facilitating the flow of rural workers to urban employment in China," Centre of Policy Studies/IMPACT Centre Working Papers g-188, Victoria University, Centre of Policy Studies/IMPACT Centre.

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