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Rural-urban migrants' remittances and wage inequality: Evidence from China

Author

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  • Yunyun Wu

    (Department of Economics, Nanjing University, Nanjing, China)

  • Xiaochun Li

Abstract

There is a link between rural-urban remittances and wage inequality. However, the existing literature sheds little light on this topic. In this study, we establish a three-sector general equilibrium model to investigate the effects of rural-urban migrants' remittances on wage inequality. Further, we use Chinese macroeconomic data to calibrate the parameters and conduct analysis with numerical simulation. We find that, when rural-urban migrants raise their remittance rate, wage inequality between skilled labour and the urban formal sector remains unchanged in the sector-specific capital case but narrows in the sector-mobile capital case. Moreover, in the sector-specific case, skilled and unskilled wage inequalities, wSY and wSZ, decrease at the same rate as the urban-rural wage inequalities, wXY and wXZ, respectively. In the mobile case, however, the former declines faster than the latter.

Suggested Citation

  • Yunyun Wu & Xiaochun Li, 2020. "Rural-urban migrants' remittances and wage inequality: Evidence from China," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 66(3), pages 129-139.
    • Handle: RePEc:caa:jnlage:v:66:y:2020:i:3:id:53-2019-agricecon
    DOI: 10.17221/53/2019-AGRICECON
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    Cited by:

    1. Dianshuang Wang & Xiaochun Li & Zixin Hu & Run Yuan, 2023. "Labor market distortion and its impact on wage inequality in the modernization of small‐scale agriculture," International Journal of Economic Theory, The International Society for Economic Theory, vol. 19(4), pages 988-1007, December.

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