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Labor market distortions, rural-urban inequality and the opening of China's economy

  • Hertel, Thomas
  • Zhai, Fan

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.sciencedirect.com/science/article/B6VB1-4HD8BHK-1/2/03ed4c2319aa244d31c9904109d6d597
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Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 23 (2006)
Issue (Month): 1 (January)
Pages: 76-109

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Handle: RePEc:eee:ecmode:v:23:y:2006:i:1:p:76-109
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30411

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  1. 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.
  2. repec:cup:cbooks:9780521319867 is not listed on IDEAS
  3. 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.
  4. 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.
  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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