Dual Economic Structure, Surplus Labour and Rural-Urban Migration

Abstract

AbstractUsing official data and survey data from the Chinese Household Income Project survey, this study evaluates the surplus labor in China and Japan based on the Lewisian dual economy model, estimates the change in wage differentials between unskilled and skilled workers in China and Japan, and investigates the determinants of the wage differentials between migrant and local urban workers in China. The results suggest that surplus labor decreased during the period from 1990 to 2005 in China following the development process in Japan, which indicates that the Chinese economy has approached the Lewisian turning point. However, in contrast to Japan, the wage differential between skilled and unskilled workers is larger in China. Differences in education attainment, which is a major influential factor, widened the wage differentials between migrant and local urban workers in China in the 2000s. Discrimination against migrant workers widens the wage differentials. This suggests that labor market segmentation by a set of institutions, such as the household registration system, widens the wage differentials even when the surplus labor has decreased in China.KeywordsLewisian turning pointSurplus laborMigrantsWage differentials