Rural labour migration and its contribution to China’s economic growth-- A historical estimation

Introduction: China has experienced massive rural labour movement since 1978. The rural economic reforms have released large amounts of labour to move from agricultural sectors to other more productive sectors such as construction, manufacturing and services. According to the First Agricultural Census China had 74 million rural labour who worked for more than one month outside of their township of residence in 1997. The corresponding data has increased to 130 million in 2006 and more than 140 million in 2008. Meanwhile the employment in rural non-agricultural sectors such as TVEs and private enterprises has also increased dramatically. The large rural labour movement has proven to be a source of gain in allocative efficiency and labour productivity. Many studies have shown that the contribution to economic growth of rural labour movements (from agricultural to rural non-agricultural and urban industrial and services sectors) was 14 to 20 percent between 1978 and the mid 1990s (World Bank, 2005; Woo, 1998; Cai and Wang, 1999; Kuijs and Wang, 2005 and Dekle and Vandenbroucke, 2006). However there has less research in the literature about the contribution of rural labour movement to economic growth from the late 1990s to the present, though China has sustained its rapid economic growth during last two decades and there is rising and accelerating number of individuals from the rural labour force that are moving from farm to off farm employment (Wang, et. al. 2011). To fill this gap in empirical knowledge this paper conducts historical estimation of the contribution of rural labour movements to China’s economic growth and rural household income growth over the period of 1997 to 2010. Methodology: The investigation employs a dynamic CGE model of Chinese economy - SICGE model. There are two versions of SICGE model: one is based on 1997 input-output table and the other is based on 2002 input-output table of China. In this paper, the former was applied to condu...