By Ye Xingqing, research team on “Strategies and Policies Guiding the New Normal of Economic Growth”, DRC

Research report No.158, 2016 (Total 5041) 2016-11-28

Abstract: Over the past 30 consecutive years of high-speed economic growth in China, the reallocation of labor and land from rural areas to urban areas has played a significantly supporting role. With the development of industrialization and urbanization, marginal productivity of agricultural labor and migrant workers’ salary have started increasing. The reallocation of labor force from rural areas to urban areas has made less contributions to the enhancement of the whole society’s labor productivity. Since the total area of reallocated land from rural areas to urban areas is declining, with the adjustment of land acquisition compensation policy, the effect of land reallocation between rural areas and urban areas tends to decrease. We need to notice the objective necessity of the decrease and further understand its unique systematic reason. Through comprehensively deepening reform, surplus labor in agriculture should be completely liberated from the land, and encourage these farmers to get employed in non-agricultural industries step by step. By reforming the regulatory mechanism of newly increased construction land, reforming land expropriation system according to new principles and exploring the method for the marketization of collectively-owned land designated for business-related construction, we can further release the reallocation effects of resources between urban and rural areas and provide supporting strength for the increase of total factor productivity under the new normal of economic development.

Key words: reallocation between urban and rural areas, total factor productivity, labor force, land