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

The Rise of Rural-to-Rural Labor Markets in China

Rural labor movement in China has increased dramatically in recent years and is
now the largest peacetime movement of labor ever known (Solinger, 1999). The migrant
labor force has grown from less than 20 million in 1988 to between 40 and 100 million in
1995 (Chan, 1996). Undoubtedly, there is more to come. An abnormally high proportion
of China’s population is engaged in agriculture when compared to agriculture’s share of
GDP and other countries with comparable levels of GDP and income per capita (Taylor
and Martin, forthcoming). The structural transformation of China into a modern,
industrial economy will depend on the continuing movement of labor off the farm.

Most of the labor movement in China has been from the countryside to the city,
but it is unclear if urban areas can continue to absorb the predicted volume of rural labor
that will leave agriculture. Through the mid-1990s, migration was the fastest growing
component of the off-farm labor force (Rozelle, et. al., 1998). The plight of the migrant
leaving his or her rural home to find work in China’s cities, despite the presence of
restrictions against migrant employment in urban areas, is the most studied part of
China’s labor movement (e.g., Roberts, 1997; Wang and Zuo, 1996; Chan, 1996).
Immediate economic problems and reform challenges faced by urban officials, however,
may act to limit growth in rural-to-urban labor movement in the future. The prospects of
high urban unemployment due to layoffs associated with state-owned enterprise reform,
unfinished reforms in urban housing markets and congested urban infrastructure may
induce leaders to halt or reverse the liberalization of rules that discourage rural workers
from seeking jobs in the city.

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