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Labour reallocation, productivity growth and dualism: The case of China

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  • Kwan, Fung
  • Zhang, Yang
  • Zhuo, Shuaihe

Abstract

Building upon Temple and Wöβmann (2006), we propose a three-sector model to identify the role of labour reallocation to the growth of total factor productivity (TFP) in China since the 1980s. Based on System Generalized Methods of Moments (GMM) dynamic panel data models and a newly-developed provincial human capital stock dataset, our results show that labour reallocation from agriculture to rural non-agriculture is more important than the urban counterparts to output growth and that this effect is more evident in coastal areas of China. Implications of structural transformation for other populous developing economies are discussed.

Suggested Citation

  • Kwan, Fung & Zhang, Yang & Zhuo, Shuaihe, 2018. "Labour reallocation, productivity growth and dualism: The case of China," International Review of Economics & Finance, Elsevier, vol. 57(C), pages 198-210.
  • Handle: RePEc:eee:reveco:v:57:y:2018:i:c:p:198-210
    DOI: 10.1016/j.iref.2018.01.004
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    More about this item

    Keywords

    Labour reallocation; TFP growth; Wage differentials;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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