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Urbanization and/or rural industrialization in China

Huasheng Song, Jacques Thisse () and Xiwei Zhu

Regional Science and Urban Economics, 2012, vol. 42, issue 1-2, 126-134

Abstract: We study urbanization and rural industrialization in a setting involving one urban region (U) and one rural region (R). Farmers are heterogeneous in their attitude toward migration, while firms' efficiency is higher in U than in R because agglomeration economies have been built in U. Farmers face three options: (i) working in the agricultural sector, (ii) setting up firms in R, or (iii) moving to U. There exists a unique equilibrium, which displays four different patterns. In the first one, both urbanization and rural industrialization occur simultaneously. In the second and third patterns, either urbanization or rural industrialization arises, whereas the last pattern involves an industrial core and an agricultural periphery. The conditions under which each pattern emerges are determined. The transfer of labor from the agricultural to the industrial sector always increases farmers' welfare, while the welfare impact on incumbent urban workers is ambiguous.

Keywords: Urbanization; Rural industrialization; New economic geography (search for similar items in EconPapers)
JEL-codes: J61 R12 R13 R58 (search for similar items in EconPapers)
Date: 2012
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Working Paper: Urbanization and/or rural industrialization in China (2011) Downloads
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DOI: 10.1016/j.regsciurbeco.2011.08.003

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