Chapter Three. Labor Market Development And Expansion Of Rural And Urban Employment

Abstract

Economic reform in China can be described as the transition from a planned economy to a market economy through the process of dualistic economic development, as first proposed by Arthur Lewis. Chinas long-standing divide between urban and rural areas is the result of adopting a development strategy emphasizing the development of heavy industry and utilizing a system of planned labor allocation and employment. The employment system under a planned economy consisted of two key elements. First was the exclusive policy of comprehensive urban employment. The second component was household registration system, which separated the population and labor markets of rural and urban areas, preventing emergence of an integrated labor market. This chapter analyzes Chinas dualistic economic development through summarizing the effects of the reform and opening policy on labor market development and employment expansion. It also provides a summary of some priority areas for further reform of the labor market. Keywords: China; economic reform; household registration system; labor market development; market economy; opening policy; rural employment; urban employment