Organizer: Margaret Maurer-Fazio, Bates College
Chair: Thomas G. Rawski, University of Pittsburgh
Discussants: Barry Naughton, University of California, San Diego; Thomas G. Rawski, University of Pittsburgh
Economic reforms, entailing a move from a centrally planned to a largely market-based resource allocation system, have profoundly affected the work environment of hundreds of millions of Chinese workers and peasants. Changes in the countryside, beginning with the decollectivization of agriculture and the adoption of the household responsibility system, quickly snowballed. Rural private enterprises were sanctioned; restrictions on the hiring of labor were removed; and township and village enterprises grew rapidly-all leading to more off-farm jobs. Migration and mobility restrictions were loosened allowing large numbers of peasants to look for work outside of agriculture and outside of their home communities. The reforms created the necessary conditions for both the emergence of a rural labor market and for peasants to begin to compete for jobs in rural areas.
The papers in this first of two panels dealing with Chinese labor market developments are concerned with both the role of the market and institutional factors in assessing the effects of rural labor mobility. Denise Hare, uses micro-level data collected in 1995 to identify features of current patterns of labor migration from rural China and to assess the efficiency of this migration as a labor reallocation mechanism. Sarah Cook uses a 1990-1994 longitudinal, household data set to examine how rural households are taking advantage of new employment opportunities. Dennis Yang and Hao Zhou use provincial data to assess the actual and potential welfare gains from labor movement in the reform period.
Efficiency Considerations of Out Migration from Rural China
Denise Hare, Australia National University
The tremendous abundance of labor in rural areas is one of the most perplexing issues currently facing policy makers in the People's Republic of China. Central and municipal authorities fear that large-scale labor movement out of rural China will have politically and socially destabilizing effects on the cities and towns to which workers migrate. Many of these communities are simply not equipped to provide sufficient employment opportunities and adequate living arrangements for the multitudes of laborers who arrive looking for work. Due to the pressing nature of the problems caused by such large migratory flows, much of the current government policy in China is directed at reducing these flows, using any available means.
The goal of this research is to shed light on some potentially positive labor resource allocation aspects of migration and to identify means by which the labor transfer process might be made more efficient. The effects of out migration on the employment and wage outcomes of individual migrants are measured using 1995 micro-level data collected from rural households in migration source areas.
Particular attention is paid to gaining a better understanding of migratory experiences, and the degree to which the frequency and length of migrants' employment spells are correlated with characteristics of the individual migrant. A better understanding of the dynamics of the migratory spell will aid policy makers who desire to streamline the migrants' job search process and reduce the amount of time migrants spend in unemployment.
Market Transition, Household Labor Allocation and Incomes in Rural China
Sarah B. Cook, Harvard University
The transfer of labor into more productive employment is a crucial mechanism by which low income rural households with few non-labor assets increase their incomes. This process typically involves a reallocation of labor from agriculture to urban, industrial employment. Although China's economic reforms have led to a dramatic increase in demand for off-farm labor, the demand remains inadequate to absorb the potential supply of labor from the countryside.
In this paper I explore the factors which enable farm households to transfer labor into more productive employment and thus increase their incomes. Using 1990-1994 panel data from farm households in one county in Shandong Province, I analyze the relationships between household and individual characteristics, including political status, the allocation of labor and incomes during a period of rapid market development. Illuminating these relationships will contribute to our understanding of who gains and loses during transition, and of the emerging patterns of income distribution in rural China. Preliminary results suggest that political factors remain important determinants of labor use and income, but that farmers' dependence on political connections is being weakened by newly emerging market forces, notably the growth in demand for low-skill, wage labor.
Economic Reforms, Sectoral Labor Mobility and Welfare Changes in China
Dennis Tao Yang, Duke University
Hao Zhou, Duke University
Massive rural-urban migration is a well known phenomenon observed in most developing countries. In China, however, such an experience has not taken place. Since 1949, China has adopted a development strategy emphasizing urban industries with capital intensive technologies. Extracting a surplus from agriculture and retaining profits from industry were the primary sources of capital accumulation. A strict control of rural-urban migration was enforced to reduce urban consumption and to increase industrial investment. Such a development strategy has led to a long time rural-urban segregation in China.
This paper utilizes 1986-93 Chinese provincial data to analyze labor productivity in state industries, staple agriculture and rural industries under the framework of sectoral development. Using production function and simulation analyses, we assess the achieved and the potential welfare gains from sectoral labor movement during the recent economic reform period. Our main findings include: (1) Restrictions on labor mobility, especially rural-urban migration, have caused a great loss in economic efficiency; (2) The rise of rural industries and other partial reforms have resulted in significant gains in economic welfare, and (3) Further reforms, such as the abolition of compulsory purchase and the establishment of land markets, will greatly increase the total social output by releasing more agricultural labor to rural industries.