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Urbanization, Structural Transformation And Rural-Urban Disparities In China And India

Author

Listed:
  • Viktoria Hnatkovska

    (Vancouver School Economics, University of British Columbia)

  • Amartya Lahiri

    (Vancouver School Economics, University of British Columbia)

Abstract

Over the past three decades India and China have experienced rapid economic growth along with structural transformation. Underneath the overall similarity however was one significant difference: rural-urban wage gaps declined in India, but widened in China. In both countries, the majority of these wage dynamics are left unexplained by worker attributes. We formalize a two- sector-two-location model in which structural transformation and urbanization respond endoge- nously to productivity shocks. While the structural transformation effect widens the urban-rural wage gap, the urbanization e¤ect reduces it, allowing the model to account for wage convergence in India and wage divergence in China.

Suggested Citation

  • Viktoria Hnatkovska & Amartya Lahiri, 2017. "Urbanization, Structural Transformation And Rural-Urban Disparities In China And India," Working Papers 022312, Centre for Advanced Financial Research and Learning (CAFRAL).
    • Handle: RePEc:ris:cafral:022312
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    Keywords

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    JEL classification:

    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis

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