Human capital, migration and rural entrepreneurship in China
Purpose – Many countries have experienced, or are experiencing, urbanization. One such example is China. Even though the large-scale rural-urban migration seems chaotic on the surface, there are certain underlying forces driving individual decisions. The purpose of this paper is to provide some understanding of the relationship between human capital, migration, and occupational choices. Design/methodology/approach – The paper starts with an overlapping generations model. Human capital plays various roles across different occupations – it does not affect the income of farmers, it affects income of workers linearly, and it has increasing returns in rural non-farm business. The paper then derives income profiles for individuals with heterogeneous human capital, and finds the human capital thresholds of occupations. The paper calibrates the model to China, and simulates the model to answer two questions: how does an improving human capital distribution affect rural wages, quantities of migrants and return migrants? How does a fast-growing urban wage rate affect rural wages, quantities of migrants and return migrants? Findings – First, depending on the initial human capital level, policies aiming to enhance human capital may have different impacts on migration. If the initial human capital level is low, these policies will yield more permanent migrants; on the contrary, if the initial human capital is at a relatively high level, then a shrinking permanent migrant class with a growing entrepreneur class can be expected. This results in an inverted U-shaped relation between the initial human capital level and the size of the permanent migrant class. Second, even though the non-farm business of return migrants helps raise rural wages, the income inequality between rural and urban areas is not eliminated and migration is persistent. Third, borrowing constraints limit the size of rural non-farm businesses and slow down the development of rural industry. The fourth and final point is that, migration costs discourage labor mobility and reduce the quantities of both permanent migrants and entrepreneurs. Originality/value – This is an original paper on this subject. JEL Classification: J24, J62, O15, O18, L26
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 4 (2011)
Issue (Month): 2 (September)
|Contact details of provider:|| Web page: http://www.emeraldinsight.com|
|Order Information:|| Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK|
Web: http://www.emeraldinsight.com/igdr.htm Email:
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Zhao, Yaohui, 2002. "Causes and Consequences of Return Migration: Recent Evidence from China," Journal of Comparative Economics, Elsevier, vol. 30(2), pages 376-394, June.
- Elizabeth M. Caucutt & Thomas F. Cooley & Nezih Guner, 2007.
"The Farm, the City, and the Emergence of Social Security,"
NBER Working Papers
12854, National Bureau of Economic Research, Inc.
- Elizabeth Caucutt & Thomas Cooley & Nezih Guner, 2013. "The farm, the city, and the emergence of social security," Journal of Economic Growth, Springer, vol. 18(1), pages 1-32, March.
- Caucutt, Elizabeth M. & Cooley, Thomas F. & Guner, Nezih, 2008. "The Farm, the City, and the Emergence of Social Security," IZA Discussion Papers 3731, Institute for the Study of Labor (IZA).
- Caucutt, Elizabeth & Cooley, Thomas F & Guner, Nezih, 2007. "The Farm, the City and the Emergence of Social Security," CEPR Discussion Papers 6131, C.E.P.R. Discussion Papers.
- Thomas F. Cooley & Elizabeth M. Caucutt & Nezih Guner, 2006. "The Farm, the City, and the Emergence of Social Security," Working Papers 06-21, New York University, Leonard N. Stern School of Business, Department of Economics.
- Elizabeth M. Caucutt & Thomas F. Cooley & Nezih Guner, 2012. "The Farm, the City, and the Emergence of Social Security," Working Papers 672, Barcelona Graduate School of Economics.
- Elizabeth M. Caucutt & Thomas F. Cooley & Nezih Guner, 2012. "The Farm, the City, and the Emergence of Social Security," UFAE and IAE Working Papers 923.12, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Thomas Cooley & Nezih Guner & Elizabeth Caucutt, 2007. "The Farm, The City, and the Emergence of Social Security," 2007 Meeting Papers 113, Society for Economic Dynamics.
- Christian Dustmann, 2003. "Children and return migration," Journal of Population Economics, Springer, vol. 16(4), pages 815-830, November.
- Hillel Rapoport, 2002. "Migration, credit constraints and self-employment: A simple model of occupational choice, inequality and growth," Economics Bulletin, AccessEcon, vol. 15(7), pages 1-5.
- Gerhard Glomm, 1992. "A Model of Growth and Migration," Canadian Journal of Economics, Canadian Economics Association, vol. 25(4), pages 901-22, November.
- Gine, Xavier & Townsend, Robert M., 2003.
"Evaluation of financial liberalization : a general equilibrium model with constrained occupation choice,"
Policy Research Working Paper Series
3014, The World Bank.
- Gine, Xavier & Townsend, Robert M., 2004. "Evaluation of financial liberalization: a general equilibrium model with constrained occupation choice," Journal of Development Economics, Elsevier, vol. 74(2), pages 269-307, August.
- Robert E. Lucas, Jr., 2004. "Life Earnings and Rural-Urban Migration," Journal of Political Economy, University of Chicago Press, vol. 112(S1), pages S29-S59, February.
- Fan, Shenggen & Zhang, Xiaobo, 2002. "Production and Productivity Growth in Chinese Agriculture: New National and Regional Measures," Economic Development and Cultural Change, University of Chicago Press, vol. 50(4), pages 819-38, July.
- Dustmann, Christian & Kirchkamp, Oliver, 2001.
"The Optimal Migration Duration and Activity Choice after Re-migration,"
IZA Discussion Papers
266, Institute for the Study of Labor (IZA).
- Dustmann, Christian & Kirchkamp, Oliver, 2002. "The optimal migration duration and activity choice after re-migration," Journal of Development Economics, Elsevier, vol. 67(2), pages 351-372, April.
- Dustmann, Christian & Kirchkamp, Oliver, 2000. "The Optimal Migration Duration and Activity Choice after Re-migration," Sonderforschungsbereich 504 Publications 00-39, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
- Scott Rozelle & Johan F.M. Swinnen, 2004. "Success and Failure of Reform: Insights from the Transition of Agriculture," Journal of Economic Literature, American Economic Association, vol. 42(2), pages 404-456, June.
- Dan Bernhardt & Huw Lloyd-Ellis, 1993.
"Enterprise, Inequality and Economic Development,"
893, Queen's University, Department of Economics.
- Abhijit V. Banerjee & Andrew F. Newman, 1990.
"Occupational Choice and the Process of Development,"
911, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Banerjee, Abhijit V & Newman, Andrew F, 1993. "Occupational Choice and the Process of Development," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 274-98, April.
- Mukherjee, Anit & Zhang, Xiaobo, 2007. "Rural Industrialization in China and India: Role of Policies and Institutions," World Development, Elsevier, vol. 35(10), pages 1621-1634, October.
- Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 808-27, August.
- repec:ebl:ecbull:v:15:y:2002:i:7:p:1-5 is not listed on IDEAS
- D. Gale Johnson, 2000. "Agricultural Adjustment in China: Problems and Prospects," Population and Development Review, The Population Council, Inc., vol. 26(2), pages 319-334.
- Alice Mesnard, 2004. "Temporary migration and capital market imperfections," Oxford Economic Papers, Oxford University Press, vol. 56(2), pages 242-262, April.
When requesting a correction, please mention this item's handle: RePEc:eme:igdrpp:v:4:y:2011:i:2:p:100-122. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Virginia Chapman)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.