The Labor Flow Of China And The Income Gap Between Urban And Rural Areas

According to the theory of Development Economics, the free migration of laborforce will lead to the convergence of economic growth and income gap in differentregions. In2011, there were about159million migrant workers in China, accountingfor44.2percent of urban employment. The large scale of rural-to-urban labor forcemigration is one of important characteristics of China in the development stage ofdual economy. The migration of labor force is significant to increasing rural labor’sincome and reducing the income gap between urban and rural areas.The history, current situations, and influential factors of labor mobility, and thecurrent situation, and influential factors of income gap between urban and rural areaswere illustrated firstly in this paper. Secondly, the two mechanisms of labor forcereducing income gap between urban and rural areas in China was analyzed in terms ofempirical analysis. And then, econometrics model was built according to panel data,such as fixed effect model, and OLS regression and IV regression was used to analyzethe effect of labor migration to income gap between urban and rural areas in China.Finally, some proposals was given according to the results of empirical analyses.The results of this paper showed that the labor migration significantly reducedincome gap in the year after1992, and as to different regions, labor force migrationsignificantly reduced income gap in central and western regions of China. Hence, inorder to promote the labor force flow reasonably in central and western regions, andto take the advantage of its positive effect of reducing urban-rural income gap, twoaspects of measurements were proposed in this paper, including deepen thereformation of Hukou system, and build uniform labor market in urban and ruralareas.