Date of Award

12-2014

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Legacy Department

Economics

Advisor

Dr. Michal Jerzmanowski

Committee Member

Dr. Kevin Tsui

Committee Member

Dr. Chungsang Lam

Committee Member

Dr. Sergey Mityakov

Abstract

This paper argues that too many workers were placed in traditional agricultural sector in China's economy after 1978. I investigate two factors which hindered the labor mobility from agricultural and non-agricultural sector: (1) human capital dierence between rural and urban workers brought by China's urban oriented public educational policy; (2) absence of land property rights and a well functioning land market. I incorporate those two frictions into a two-sector dynamic macro model. I calibrate the model and show that it provides a good fit for the evolution of GDP per-capita and employment share in agriculture in the Chinese economy. I use the model to conduct counterfactual experiments in order to evaluate the hypothetical performance of the Chinses economy under different policy scenarios. If rural people received the same quality of public education as urban people did, GDP per-capita during this period would increase by about 30%, and employment share in agricultural sector would decrease by 4-8 percentage points; if there was a well functioning land market, so that farmers were able to cash in their land rent by either selling or subleasing land, GDP per-capita would increase 12.8% for this period and labor share in agricultural sector would decrease by 4.63 percentage point on average.

Included in

Economics Commons

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