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The impact of modern agricultural development on wage inequality within rural areas

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  • Xiaochun Li
  • Yuean Zhou

Abstract

Wage inequality within rural areas refers to the wage inequality between the modern and traditional agricultural sectors. In developing countries, the development of modern agriculture is an important factor affecting this inequality. This paper establishes a general equilibrium model to investigate this impact under the framework of labor transfer. We found that capital subsidy policies for modern agriculture will be conducive to expanding the scale of modern agriculture and narrowing wage inequality within rural areas. Conversely, wage subsidies for modern agriculture would widen wage inequality within rural areas, despite facilitating the transition of traditional agricultural labor into modern agriculture.

Suggested Citation

  • Xiaochun Li & Yuean Zhou, 2025. "The impact of modern agricultural development on wage inequality within rural areas," International Journal of Economic Theory, The International Society for Economic Theory, vol. 21(2), pages 201-220, June.
    • Handle: RePEc:bla:ijethy:v:21:y:2025:i:2:p:201-220
    DOI: 10.1111/ijet.12423
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