Rural Labor Migration And Income Distribution

The classics works about income distribution and economy development is a famous conclusion proposed by Kuznets in 1955. The conclusion is that with the development of economic, the odds of income distribution in developed country go through a trend in which it extends first and then gradually diminish. Following the Kuznets, Robinson (1976) based on the dual economy made outstanding contribution to the study of inverted U hypothesis in theory. He used mathematical method to proof that the inverted U is inevitable. S.Anand and S.Kanbur (1993) provided a shaped Kuznets process, analyzed the changes of the income distribution in the economic growth. He derived the function of inequality-development and conditions for turning point with six inequality indicators commonly used.The impact of the transfer (or migration) of rural labor to urban on the income distribution has been an important part of research in development economics problems. There is controversial about the impact of labor migration on the income distribution in the areas (rural) of which labor move out. In theoretical research unanimous conclusion can not be given, some economists gradually shift the focus of empirical research studies trying to find a satisfactory answer through economic analysis of the reality. As the outflow labor's major economic ties with their families using the channels in remittances, thus the impact of remittances on rural income distribution has become the focus of empirical research. The remittances have positive and negative evaluation of the two opposite conclusion. Based on the analysis of numerous studies, in different places and different times the labor migration of the rural areas there is a big difference in the income distribution. The migration of rural residents will not be able to reduce the level or the income gap among farmers.In this paper based on Sundrum (1990), the Gini coefficient of urban and rural decomposition, from the perspective of relative income inequality study the dynamic process of income inequality in economic growth. First in a two-sector model framework, using of mathematical deduction, the integrity conditions of the inverted U have been given. The results show that the conditions for the establishment of inverted U hypothesis is a positive correlation with per capita income gap between the departments, negative correlation with the level of income inequality within departments. In the inverted U hypothesis, the greater gap of modern and traditional internal departmental income inequality will be required the longer time to reach the turning point of level income inequality; the bigger average income gap between the two departments, the faster population transfer will enable income inequality as soon as possible to achieve the turning point of income inequality level.A basic assumption of two-department economic model is the fixed income levels of the two departments, namely without considering the increase effect of economic development. In this paper, under the assumption that the two departments average income changes with the passage of time, give inverted U hypothesis conditions and the nature through the method of mathematical deduction. I find that economic growth expanded the income gap, and the labor migration to narrow income gap between the departments. Early in economic development, along with the rapid economic growth of the modern sector and the transfer of the surplus labor of traditional sector, the income gap is widening between the departments and the level of income inequality gradual increases, and then in the latter part of economic development the income inequality declines. The simulation result shows that if China's economic development maintains to the average growth rate of recent years and also, urban and rural areas can maintain the current level of income inequality, the overall level of income inequality will reach the turning point of inverted U curve in 2016 or around. In this paper, I use a numerical method to study the role of urban and rural labor force migration in the income inequality. The result shows that comparing with the slower rate of population transfer a faster rate of the urban and rural population transfer generally decreases in the level of income inequality. The overall level of domestic income inequality shows an inverted U easier, faster and more able to pass through the turning point. This shows that the transfer of rural labor to cities helps reduce overall income inequality and improve income distribution. Based on data from a sample survey of farmers in 2006 Jilin Province, using of micro-econometric analysis method, farmer households will be divided into labor out household and labor non-out household to fit for function of family income using multiple linear regression analysis. By comparison labor variable coefficient to study the impact of rural labor migration on rural income growth. The result shows farmers out of the household have the higher marginal contribution rate to the household income than the non-out farmers 31.2%. Thus, the migration of the rural labor force will help improve the overall level of income.Two methods were used to calculate the effect of rural labor migration on the overall income inequality. The first and the simplest procedure uses actual household income reported in the survey as the income under the migration regime; the no migration regime would then simply result from subtracting remittances. A second procedure for approximating incomes under migration regimes is to estimate what household incomes would be. By providing better estimates of incomes under"no migration,"I present a more accurate representation of income distribution. Two calculation methods both show that labor migration increases income inequality and income distribution worsen. This paper flowing Stark-Taylor-Yitzhaki ideas to study the marginal impact of rural labor migration on the income inequality in Jilin Province, finds that the remittance income will increase overall income inequality levels among farmers. If a 1% increase in remittance income of rural families, internal rural income inequality increases 6.46%. This paper using Sen-social welfare function analyzes the effect of the rural labor migration on the overall social welfare. The result shows that the migration of surplus rural labor force improves social welfare, and then analyzes marginal effect of the rural labor migration on the rural social welfare. The result finds that a 1% increase in remittance income improves social welfare in rural areas 16.63%.This paper gives a number of theoretical and practical significance results, providing some useful lessons for China's income distribution theory and empirical studies.