Labor Mobility Barriers and Agricultural Productivity in China: Analysis Based on a General-Equilibrium Roy Model

Lili Wang (), Xue Qiao and Jidong Chen ()
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Lili Wang: School of Economics, Nankai University
Jidong Chen: School of Public Policy and Management, Tsinghua University

Annals of Economics and Finance, 2023, vol. 24, issue 2, 377-399

Abstract: With sustainable economic growth and structural transformation, labor productivity in China's agricultural sector has gradually improved. However, significant gaps remain compared to the nonagricultural sector and agriculturally advanced economies. To explain these disparities in sectoral productivity, we develop a two-sector general-equilibrium Roy model incorporating mobility barriers, such as China's hukou policy. These barriers result in labor without comparative advantages in agriculture being trapped in the agricultural sector, which lowers both the quality of labor and productivity in agriculture. Additionally, the phenomenon of insufficient per capita arable land further hampers the growth of agricultural labor productivity. We then calibrate the model's parameters using sector-level data and conduct quantitative analysis. The results show that the mobility barrier across sectors declines between 2002 and 2021, which explains 28% of the rise in the agricultural labor productivity of China. These findings underscore the importance of further reducing labor mobility barriers to promote the improvement of agricultural productivity and accelerate urban-rural integration.

Keywords: Mobility barrier; Labor selection; Agricultural productivity (search for similar items in EconPapers)
JEL-codes: J24 O15 R23 (search for similar items in EconPapers)
Date: 2023
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