The impact of modern agricultural development on wage inequality within rural areas

Xiaochun Li and Yuean Zhou

International Journal of Economic Theory, 2025, vol. 21, issue 2, 201-220

Abstract: Wage inequality within rural areas refers to the wage inequality between the modern and traditional agricultural sectors. In developing countries, the development of modern agriculture is an important factor affecting this inequality. This paper establishes a general equilibrium model to investigate this impact under the framework of labor transfer. We found that capital subsidy policies for modern agriculture will be conducive to expanding the scale of modern agriculture and narrowing wage inequality within rural areas. Conversely, wage subsidies for modern agriculture would widen wage inequality within rural areas, despite facilitating the transition of traditional agricultural labor into modern agriculture.

Date: 2025
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https://doi.org/10.1111/ijet.12423

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Persistent link: https://EconPapers.repec.org/RePEc:bla:ijethy:v:21:y:2025:i:2:p:201-220

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