less education. These workers are less likely to find other sources of off-farm
employment.
The importance of rural-to-rural labor market development for workers that have
less access to local or urban employment has implications for labor market development
and rural industrial policy. Policies that promote rural industrial expansion will provide
employment for a wider spectrum of rural workers than an emphasis on urban-to-rural
movement or promotion of self-employment will. If industries that arise in small towns
have the same employment patterns, this may be an additional argument for those who
are promoting investment in small town development. The rise in rural-to-rural labor
movement, both commuting and migration, also indicates that a rural labor market is fast
developing in China. Policies that allow this development to continue will facilitate more
economic integration in rural China and lessen income differences between regions.
The findings presented in this paper also indicate that the development of China’s
recent labor movement patterns has been driven by private enterprises and firms engaged
in light industrial production. These firms, which are more profit-oriented and rely
heavily on efficient production from large labor forces, are less willing to favor local
residents. The disappearance of the reticence of collective firms to hire incoming labor in
the mid-1990s may be another example of Naughton’s “gradualism” effect (Naughton,
1995), a process by which gradual liberalization in one sector induces agents in another
sector to change out of fear that they will become uncompetitive in the future. The
availability of rural-to-rural migrants may be one of the motivating forces for the rise of
the private sector described by Oi (1998).
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