Household Consumption Upgrade, Technology Progress, Factor Price Distortion and Rural-To-Urban Labor Migration in China
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| Title | Household Consumption Upgrade, Technology Progress, Factor Price Distortion and Rural-To-Urban Labor Migration in China
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| Author | Fang Fuqian*，Yu Jian**，Cheng Dong*** and Zheng Wenping |
| Organization | School of Economics, Renmin University of China；** School of Economics, Central University of Finance and Economics；*** Department of Economics, Vanderbilt University |
| Email | fangfq@ruc.edu.cn，wenpingzheng@ruc.edu.cn；yujianjh@ruc.edu.cn；dong.cheng@vanderbilt.edu |
| Key Words | Household Consumption Upgrade; Technology Progress; Wage Distortion; Capital Rent Distortion; Rural-to-urban Labor Migration |
| Abstract | This paper constructs a two-sector dynamic general equilibrium model to investigate the mechanism of how each of the following four factors influences China’s rural-to-urban labor migration, i.e., household consumption upgrade, technology progress, sectorial capital rent distortion, and wage distortion. We also explore the relative contribution of each factor in a unified framework. Our steady-state numerical results show that each of the four factors has a positive impact on labor migration to a different extent. When all four factors deviate by 0.1 unit from the initial steady state, household consumption upgrade exhibits the largest impact by promoting 4.63% more labor migration. The capital rent distortion and technology progress come closely with2.68% and 2.34% more migration while wage distortion has the weakest effect with only 0.84% more. This finding implies that the dominant reason for China’s rural-to-urban labor migration is essentially compound, which is significantly different from the United States case with just a single leading cause. Our finding also suggests the limited explanation power of Lewis model that excessively emphasizes the importance of sectorial wage difference across rural and urban areas. |
| Serial Number | WP891 |
| Time | 2015-06-30 |
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