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

Viktoria Hnatkovska and Amartya Lahiri

Working Papers from Centre for Advanced Financial Research and Learning (CAFRAL)

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.

Keywords: Rural urban disparity; urbanization; structural transformation (search for similar items in EconPapers)
JEL-codes: J6 R2 (search for similar items in EconPapers)
Pages: 57
Date: 2017-01
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