nep-cna 2010-07-17 papers

on China

Issue of 2010‒07‒17
two papers chosen by
Zheng Fang
Ohio State University

The Puzzle of Migrant Labour Shortage and Rural Labour Surplus in China By John Knight; Deng Quheng; Li Shi
Positional spending and status seeking in rural China By Brown, Philip H.; Bulte, Erwin; Zhang, Xiaobo

The Puzzle of Migrant Labour Shortage and Rural Labour Surplus in China

By:	John Knight; Deng Quheng; Li Shi
Abstract:	The paper examines the contentious issue of the extent of surplus labour that remains in China. China was an extreme example of a surplus labour economy, but the rapid economic growth during the period of economic reform requires a reassessment of whether the second stage of the Lewis model has been reached or is imminent. The literature is inconclusive. On the one hand, there are reports of migrant labour scarcity and rising migrant wages; on the other hand, estimates suggest that a considerable pool of relatively unskilled labour is still available in the rural sector. Yet the answer has far-reaching developmental and distributional implications. After reviewing the literature, the paper uses the 2002 and 2007 national household surveys of the Chinese Academy of Social Sciences to analyse and explain migrant wage behaviour, to predict the determinants of migration, and to examine the size and nature of the pool of potential rural-urban migrants. An attempt is also made to project the rural and urban labour force and migration forward to 2020, on the basis of the 2005 one per cent Population Survey. The paper concludes that for institutional reasons both phenomena are likely to coexist at present and for some time in the future.
Keywords:	China, Demographic transition, Labour market, Lewis turning point, Migrant wages, Migrant workers, Surplus labour
JEL:	J11 J31 J61 O11 O17
Date:	2010
URL:	http://d.repec.org/n?u=RePEc:oxf:wpaper:494&r=cna

Positional spending and status seeking in rural China

By:	Brown, Philip H.; Bulte, Erwin; Zhang, Xiaobo
Abstract:	Focusing on a remote area in rural China, we use a panel census of households in 26 villages to show that socially observable spending has risen sharply in recent years. We demonstrate that such spending by households is highly sensitive to social spending by other villagers. This suggests that social spending is either positional in nature (that is, motivated by status concerns) or subject to herding behavior. We also document systematic relations between social spending and changes in higher order terms of the income distribution. In particular, and consistent with theories of rank-based status seeking, we find the poor increase spending on gifts as the income distribution tightens so that local competition for status intensifies. In addition families of unmarried men (who face grim marriage prospects given China’s high sex ratios, especially in poor areas) intensify their competition for status by increasing their spending on weddings. The welfare implications of spending in order to “keep up with the Joneses” are potentially large, particularly for poor households.
Keywords:	Positional spending, Poverty, Rural-urban linkages, status,
Date:	2010
URL:	http://d.repec.org/n?u=RePEc:fpr:ifprid:983&r=cna

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