China's Rural Labor Migration and Its Economic Development. Xiaoguang Liu

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СКАЧАТЬ third chapter solves the riddle of China’s rising return on capital through theoretical and empirical analysis. The structural transformation of China’s economy is re-examined from an endogenous perspective, and an expanded model of a dual economy is constructed based on the emphasis on the transfer of agricultural labor and the effect of technology spillover in order to explain the coexistence of the high investment rate and the rising rate of capital return in China. The expanded model relaxes the hypothesis of unit elasticity of the “knowledge spillover model” on the effect of technology spillover to indicate the strong and weak conditions for an economy of different stages to maintain or increase its return on capital. The theoretical research shows that the requirement on the effect of technology spillover is turned from a strong condition to a weak condition for the transfer of labor to realize rising return on capital, and besides, the combination of the transfer of labor and technology spillover is the key to explaining the rising capital return in China. The empirical analysis reveals that the effect of China’s technology spillover meets the weak condition and backs up the rising return on capital in conjunction with the continuous transfer of the labor force.

      The fourth chapter analyzes the riddle of China’s rising rate of saving. A general model of equilibrium is established to analyze the residents’ decisions regarding consumption and savings, and divides the total rate of saving into the rate of saving of urban residents, the rate of saving of migrant workers and that of farmers. The migrant workers have a higher tendency toward marginal saving than farmers and urban residents, thanks to the difference of levels of social security and income. In the course of the continuous transfer of agricultural labor to non-agricultural sectors, the population of migrant workers has been expanding with the capital accumulation of non-agricultural sectors, and their behavior regarding a high degree of saving has also contributed to the rise of the rate of household saving and that of national saving.

      The fifth chapter analyzes the transfer of agricultural labor and the short-term fluctuations in China’s macroeconomy. In light of the empirical observation of the relationship between China’s macroeconomic cycle and the transformation of its labor market, this chapter proposes the concept of Okun’s law in a broad sense, which introduces the factor of the transfer of agricultural labor, and explains why Okun’s law is not applicable to China by virtue of the empirical data of China. The application form of Okun’s law in a broad sense is associated with the stage of economic development. Okun’s model, which only includes the variable of unemployment rate, is applicable to the developed countries that have completed their transfer of labor, and Okun’s relationship applicable to more economies in transition is supposed to include the variable of the transfer of agricultural labor. China’s unique institutional environment leads to a lack of a significant link between the rate of urban unemployment and the macro-cyclical change. This chapter also uses the transnational panel data to preliminarily test the generalized Okun’s law.

      The sixth chapter summarizes the main research conclusions, presents the policy suggestions, and points out the shortcomings of this study and the future direction of in-depth study. The research conclusions and policy suggestions involved the following aspects. First, China’s rising return on capital and sustained rapid economic growth in recent years, on the one hand, get benefits from the effect of technology spillover in the process of investment and production, and on the other hand, are supported by the transfer of agricultural labor. Therefore, it is still necessary to actively implement the policies favorable for transfer of agricultural labor, give full play to the combined effect of the transfer of labor and technology spillover in the improvement of return on capital, and maintain rapid economic growth. At the same time, we should formulate and implement the policies favorable for technological innovation, raise the level of the effect of technology spillover, and make preparations for meeting the strong condition of return on capital in the future. Second, reducing the urban–rural gap in social medical security is an effective measure to improve the level of consumption and reduce the rate of saving. Improving the level of social medical security enjoyed by rural residents through the establishment of a unified social medical security system can boost the consumption of farmers, especially migrant workers, and decrease the rate of household saving, thus helping to reduce the national rate of saving. Third, in addition to the changes in the indicators of the unemployment rate, more attention should be paid to the cyclical changes in the transfer of agricultural labor in the event of formulation of any employment policy. In China’s period of transition, the transfer of labor force constitutes a basic variable connecting the macroeconomic cycle and the fluctuation of the labor market, which shields urban employment from macroeconomic volatility, coupled with the household registration and labor employment system and policies. The strong convertibility of migrant workers between non-agricultural employment and agricultural employment absorbs the impact of macroeconomic fluctuations on the labor market to a great extent, and reduces the sensitivity of the indicators of the unemployment rate to macroeconomic fluctuations. Fourth, China now is still witnessing the huge transferable agricultural labor force, and the potential “transformation dividend” will continue to exert an enormous growth effect for a long term. So, it is optimistic that China can successfully get out of the medium income trap in the future, and the key is to develop a reasonable incentive policy to promote the transfer of agricultural labor and the construction of new urbanization.

       About the Author

      Mr. Liu Xiaoguang is currently an Associate Professor of National Academy of Development and Strategy, and the Director of China Centre for Government Debt Research in Renmin University of China (RUC). He received a PhD of Economics from Peking University, and was a Visiting Scholar at New York University and University of Chicago. He served as a Part-time Economist at the International Monetary Fund, as well as a Consultant for the Asian Development Bank. Liu’s study focusses on Macro Finance, International Economics and the Labor Market, on which he has published more than 20 academic papers and 4 monographs. He has been consistently engaged in compiling the Keynote Presentation of China Macroeconomic Forum, a quarterly forum hosted by RUC since 2006. Based on his outstanding work, Liu has been awarded Liu Shibai Economics Prize, Outstanding Scientific Research Award of Renmin University of China, China’s Think Tank Academic Achievement Award and National Excellent Doctoral Dissertation of Economics.

       About the Translator

      Zhang Zhen holds a Ph.D. in philosophy. Her main research interest lies in systems philosophy and social philosophy. She has published papers in several Chinese core journals such as Studies in Dialectics of Natural, and has translated into Chinese and published Dee Hock’s book One from Many: VISA and the Rise of Chaordic Organization.

       Acknowledgments

      Since the time when I was a graduate student, I have been paying close attention to and studying the transfer of agricultural labor and economic development in China. This book, as a further refinement and improvement of my doctoral dissertation research, can be said to have absorbed the essence of my research findings during my studies at Peking University. After in-depth consideration and polishing during my teaching at Renmin University of China, the book was finally published.

      For the compilation of this book, I would first like to extend my sincere gratitude to many teachers and friends during my studies at the National School of Development, Peking University, such as Song Guoqing, Lin Yifu, Yao Yang, Zhang Fan, Fan Gang, Huang Yiping, Alfred Schipke, Alberto Pozzolo, Xu Jianguo, Zhang Bin, Zeng Gang, Lu Ming, Zhang Yuan, Chen Binkai, Lin Wei-ji, Chen Jianqi, Li Yuan-fang, Li Xin, Li Lixing, Yan Ping, Wang Min, Zhao Bo, Luo Zhi, Xie Peichu, Gouqin, Ma Guangrong, Jia Xu, Wang Jian, Zhang Jieping, Zhang Xun, Zhao Yue Shen Guangjun, Zhou Guangsu, Wang Yaqi, Li Shuangshuang, Jiang Zhixiao, Zhou Junan, Eu Xingxing, Yang Yewei and Qiu Muyuan.

      Besides, I would like to thank the many colleagues СКАЧАТЬ