Rural infrastructure, labor productivity gap between industry and agriculture, and non-agricultural employment

【Author】

LUO Yongmin;LUO Xi;WANG Lujun

【Institution】

School of Public Finance and Taxation, Nanjing University of Finance and Economics;School of Economics, Shandong University;School of Public Finance and Taxation, Nanjing University of Finance and Economics

【Abstract】

According to the dual economic theory, the labor productivity gap between industry and agriculture is the core factor that promotes labor migration. Compared with Western countries, the Chinese government has a strong executive power and the unique governance system has the obvious advantage of pooling all possible resources to address major problems. The unprecedented scale of rural infrastructure construction since the 1990s is just one example, which can explain the changing characteristics of rural labor migration in China to a large extent. Therefore, this paper believes that there are two core elements of China’s rural labor migration to cities: one is the labor productivity gap between industry and agriculture; the other is the construction of rural infrastructure that has spent huge financial and human resources. And these two core elements play different roles in different historical periods. Their respective effects on non-agricultural employment also have an interactive impact. In order to verify the comprehensive impact of rural infrastructure on non-agricultural employment, this paper analyzed the micro mechanism of rural infrastructure influencing non-agricultural employment with the micro data of China Labor-force Dynamics Survey (CLDS), and found that from the micro level, the rural infrastructure, such as clinics, which mainly improves farmers’ living conditions, can keep farmers from non-farming activities; the rural infrastructure, such as roads and irrigation, which mainly promotes labor transaction efficiency and agricultural production, can promote non-agricultural employment; with the narrowing of the gap between industrial and agricultural labor productivity, the role of rural infrastructure in promoting non-agricultural employment is increasing. Considering the complex interaction between macroeconomic variables, this paper took the above conclusions as the micro basis to build a dynamic general equilibrium (DGE) model. It is found that against the macro background of industry nurturing agriculture and the narrowing of the gap between industrial and agricultural labor productivity, the overall rural infrastructure investment can promote non-agricultural employment, and this role will continue and strengthen for a long time. The marginal contribution of this paper is as follows. First, based on the significant advantage of pooling all possible resources to address major problems in China’s national governance system, this paper explains the changes in the migration speed of China’s rural labor force from the perspective of rural infrastructure construction, which makes important theoretical and empirical contributions to building an economic system and academic discourse system with Chinese characteristics, Chinese manner and Chinese style. Second, this paper puts multiple types of infrastructure into the same analytical framework to study their impacts on non-agricultural employment, and also provides an important micro-foundation for other macro-research involving rural infrastructure. Third, relying on micro- and macro-integrated data, we employ the logit model to conduct empirical research on the micro mechanism of rural infrastructure affecting non-agricultural employment. It finds that infrastructure promoting labor transaction efficiency and agricultural production can effectively promote non-agricultural employment, and that the promotion effect of infrastructure on non-agricultural employment is increasingly important. Fourth, from the perspective of dynamic general equilibrium (DGE), it is confirmed that the overall rural infrastructure investment can promote non-agricultural employment, which shows that the role of rural infrastructure in promoting non-agricultural employment is consistent at both micro and macro levels.

【Keywords】

rural infrastructure;labor productivity gap between industry and agriculture;non-agricultural employment

References

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Springer Journals Database

Total: 47 articles

  • [1] GUO Hong-bao~1, QIU Wei-jie~2 (1.Department of Public Finance, Xiamen University, Xiamen 361005, China; 2.College of Economics & Management, Nanjing University of Aeronautics and Astronautics, Nanjing 10016, China ), Marginal Diminishing on Poverty-Reduction Effects of Government Spending in Rural China, Modern Economic Science,
  • [2] LV Wei LIU Chang(Dongbei University of Finance and Economics,116025), A Research on Rural China's Public Investment,Social Expenditure and Poverty Issue, Finance & Trade Economics,
  • [3] QIN Jian-jun WU La-ping (College of Economics & Management, China Agricultural University,Beijing 100083), Budgetary Support for Rural Poverty Reduction:Based on the Study of China′s 30 years Openingup and Reform, Finance and Trade Research,
  • [4] Fang Songhai, Wang Weinong and Huang Hanquan, A Study on the Increase in Peasants' Income and on the Policy for Enlarging Consumption in Villages, Management World,

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