Study On Industrial Capital Formation And Labor Migration

In recent years, three obvious phenomena that capital formation is scalar increasing, industries are conglomerating into inshore regions and central cities, and labor migrate frequently have come forth in Chinese economic in China. The research on these three phenomena is always booming, and correlative theories come into being up to now. However, as a greatest developing country in the world, all kinds of new things and questions are always fallen across with economic growth in China. So the existing theories are often challenged and there is still large space deservedly researched.With itemizing correlative theories of capital formation and labor migration, we find there are shortages as follows:1. The characters of the research methods and thinking styles of the foreign theories lie in too strict premise and suppose in spite of the different type of institution, which would be useless as to the facts of the developing country.2. Despite the theory of capital formation affords very abundance and useful ideas, its'main visual angle of research is far from perfect. For example, the existing works on capital formation generally considered the question from the whole country, and ignored regional factors.3. The existing theory of labor migration emphasized particularly on definition of migration, factor and condition, ignored mathematical and demonstration analysis, as to the relation of industry agglomeration and capital formation.It's obvious that the research on regional capital formation is far from perfect. The regional factors are ligaments of capital formation and labor migration. It was seen that the condition of capital scarcity was a very important"bottleneck"which restricted Chinese economical develop, because the unbalance proportion capital formation process had led to huge gap between towns and countries during the time of prereform. After reform, more industries had conglomerated into inshore regions than inland regions attributed to the imbalance distribution of capital. The gaps between towns and countries and among regions have led to labor migration in order to get jobs. In short, there must exist some closely relationship among capital formation and labor migration.However, one of farther practices that systematically study the relationship of the correlative theories of capital formation and labor migration is ignored, and there were few interrelated research fruits so far. Therefore, this paper will study the relationship of capital formation and labor migration based on Chinese practice; explain the three economical phenomena reasonably and wholly. Based on the above, this paper will study on the following domains:1. Scrutinizing the existing states of Chinese capital formation, industries agglomeration and labor migration, then putting forward the problems needed to account for;2. The first interpret: analysis on the evolvement relationship of capital formation and industries agglomeration and the root of regional developing gap;3. The second interpret: analysis on relation between employment effect of capital formation and employment or labor migration;4. The third interpret: analysis and demonstration on the relation between industries agglomeration and labor migration;5. The forth interpret: analysis on the counteractive of labor migration to industries agglomeration.In detail, this paper may conclude the following parts:1. Analysis on the actuality of capital formation, industrial distributing and labor migrationBased on Chinese Statistical Yearbook, Chinese Industry Economic Statistical Yearbook and Chinese Finance Statistical Yearbook, this section analyzed characters of capital formation, industrial distributing and labor migration of China. The result showed that there are obvious system, phases, and space characters of capital formation, industries agglomeration.2. Analyze the mechanism of industries agglomeration based on capital endogenetic formationIn this section, a simple model was set up to describe how endogenetic capital formation affects industry agglomeration. From the analysis on the model, it's showed that the historical haphazard and accumulative circulation mechanism are played important part in evolvement process of capital formation and industries agglomeration; then lead to the result that regional disparity was not convergent.3. The employment effect of capital formation and labor migrationIn this section, we analyzed the important role of capital formation in economic transition, and point out that capital exiguity is a greatest bottleneck in the developing country during transition; we also analyzed employment effect of different developing stages of capital formation caused by different development stratagem after the People's Republic of China building up; finally, we analyzed the release effect to country labor caused by country capital formation.4. Industries agglomeration and labor migrationIn this section, a simple labor migration model which concluded two regions was set up to explain the variables such as income gap between town and country, the developing level of different regions'industry, the cost of labor migration, the chance of employment, which are all important factors that might affect the labor migration direction. Consequently, the main variables such as the level of manufacturing industry, the cost of labor migration were selected deliberately out to be demonstration analyzed with an econometric model.5. The effect of industry agglomeration caused by labor migrationIn this section, a general equilibrium model was set up in order to explain the effect of industry agglomeration caused by country labor migration. The result showed that labor interregional migration would encourage industries to conglomerate into inshore regions because there are a large number of country labor stocks in inland regions, and those would provide the needed labor for the inshore manufacturers when country labor continue to migrate. In the other hand, the employment chance that agglomeration of inshore manufacturers provided with might attract more inland country labor to migrate there. Therefore, labor interregional migration would lead to agglomeration effect for inshore manufacturers increase by degrees.Innovation of the Dissertation:1. This paper described how endogenetic capital formation affected industries agglomeration in China with a simple economic geography model, and revealed the essential of industries agglomeration in view of trade cost.This model which is a extend one of the Baldwin's, described an economic of which had two regions, each one had three sectors and two factors of capital and labor. The difference of regions was denoted by trade cost. Compare to the traditional economic geography model, this model was simpler, so it's very easy to quantitatively analyze the characters of the equilibrium, trade freedom limit and welfare effect of the model. 2. This paper put forward the opinion that the course of capital formation should correspond to one's industrialization process, based on which, the relationship between capital formation stages labor migration was excellently explained.If the course of capital formation is thought of as the process of industrialization, it's very easy to explain the essential of Chinese capital formation based on the developing stages since the People's Republic of China had built up. The course of Chinese capital formation experienced the process of"deepen"—"shallowen"—"redeepen", corresponding to which were different employment effect that experienced the trend from increasing to decreasing. However, unlike the process of industry capital formation, the employment effect of Chinese country capital formation course had led to releasing labor effect at the very start.3. With a simple two regions labor migration model, this paper accounted for the key factors that affected labor migration direction, then demonstrated them.The model was two regions labor migration that extend from Todaro's two sectors labor migration ones, which proved that migration was a negative function of initial destination urban labour force, including destination urban unemployment, expected rural incomes, migration-related cost; migration is an increasing function of destination urban production and capital cost. Unlike the traditional labor migration theory, migration is likely to be a positive function of destination urban wages, but this is not guaranteed. The extent to which migration responds to urban wages depends on the value of the elasticity of labour–capital substitution.4. Counteractive of labor migration was explained with a duality structural modelBased on Chinese practice and according to the prototype of Chinese inshore and inland regions, this paper had set up a general equilibrium model to analyze the connection of labor migration rate, transport cost, manufacturing agglomeration effect and income gap of different regions. The result showed that labor migration would affect industries agglomeration, and there was a positive feedback mechanism among labor migration, industries agglomeration and regional disparity.