Labor scarcity and the turning point in the Chinese rural sectors: empirical evidences from a frontier production function study

Abstract

The purpose of this study is to examine whether overemployment has existed in the Chinese agricultural sector since 2000. The moment when overemployment ceases to exist is called the ‘turning point.’ After the turning point, an economy would be classified as entering the developed stage. Since the later half of the 2000s, many studies have analyzed the turning point of the Chinese economy. However, these studies have not reached a consensus as to the existence of overemployment. Varieties of data sources for the empirical studies have affected the discrepancies of these results. This study uses the flow data (e.g., the days of work and the daily wage) rather than stock. From our estimation results, we confirm that the Chinese agricultural sector has been increasing its production efficiency. In addition, our study indicates that overemployment is decreasing in almost all provinces and some regions have achieved a turning point.

Keywords:

• economic development
• overemployment
• turning point of Chinese economy

JEL codes:

• O10
• O13

Acknowledgments

We would like to express our deepest appreciation to Hiromi Yamamoto, Katsuo Otsuka, Shokichi Motai, Masahiko Gemma, and Keith Fuglie whose enormous support and insightful comments were invaluable during the course of our study. And this work was supported by JSPS KAKENHI Grant Number 24530323.

Notes

1. Ohkawa’s (1960) chapter 1 is used as reference for the above description.

2. See, Cai (2008), Table 1 and Cai, Du, and Wang (2009), Table 1.

3. Wang (2010) indicated the labor in the agricultural sector didn’t allocate most of their time for agricultural production activities based on the results of the second agricultural census.

4. It should be kept in mind that in any analysis with the use of survey data, there remains a possibility of an upward bias.

5. Ranis and Fei (1961) explained the inelasticity of the labor supply by the institutional wage that the institutional or nonmarket forces gave. See Ranis and Fei (1961, 536).

6. Three regions are the eastern, the central, and the western region.

7. Minami and Ma (2010) described overemployment as the surplus labor. According to their definition, overemployment and surplus labor seem to have the same definition.

8. The authors considered that the initial LP indicated the subsistence level.

9. Battese and Coelli (1992) show details of this kind of specification that uses panel data sets.

10. The unit ‘mu’ is the area unit in China, and one mu is equivalent to approximately 6.67 are.

11. Mugi indicate total sums of the wheat, barley, and rye.

12. See Section 4.

13. It was necessary to analyze the data for longer periods, however, the data of the NFROVDC was limited to the 2003–2009 period and thus, this study used the data for this period.

14. Wages in Table 4 are shown unit per person.

15. Urban enterprises labor is defined as the staff and worker. Most of them hold urban family registrations.

16. According to the Blue Book of Social Work, the unemployment rate in urban areas is 9.4% in 2008.

17. This software is freely downloadable in following website; http://www.uq.edu.au/economics/cepa/frontier.htm.