THE RISE OF RURAL-TO-RURAL LABOR MARKETS IN CHINA

we are unable to demonstrate whether off-farm employment levels or wages would have
been even higher had the in-migrants and in-commuters not been hired, we can show that
off-farm employment participation is still relatively high in villages where the proportion
of incoming workers employed in village industry increased. Increasing reliance on
migrants and commuters may dampen upward pressure on wages, but there is no sign of
decreasing real wages as incoming workers are hired.

The lack of any significant negative employment or wage impact from rural-to-
rural labor movement in the villages in which they are hired may explain why fewer
barriers to incoming labor have been erected in rural areas. If most residents of the
receiving villages consider incoming labor to be a benefit to the local economy, then this
would bode well for the future of rural-to-rural labor movement. Unlike the barriers that
urban leaders are expected to maintain, rural leaders in prosperous areas may be less
inclined to prevent incoming labor from accessing local employment opportunities.

The Demand for Incoming Workers and Determinants of Wages in Rural China

China’s continued development and transformation into an industrial economy
depends on the ability of farmers to move from agriculture to industry. Given that
restrictions to urban migration will likely continue to be widespread in the future, demand
for rural-to-rural migrants and commuters could play an important role in facilitating the
transfer of labor off the farm. In this section, we examine the nature of demand for
incoming migrants and commuters. Our inquiry focuses primarily on identifying the
determinants of demand and factors that discourage the hiring of incoming labor.

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