Itis universally acknowledged by economiststhat agriculturalsharesin aggregate
output and the workforce tend to decline as an economy grows. Economists
agree, however, only on the existence and inevitability of this phenomenon as a
result of general economic growth, while arguing about questions such as how
the transformations of production and employment happen during the economic
development process, what characterises each stage of the transformation and
what changes are indicative in the transformations. In China, there is little
agreement on the way these transformations take place from either a theoretical
or an empirical perspective, for the following reasons.
First, the explanations and predictions of development economics vary. For
example, while Lewis (1954, 1958) considered rural-to-urban migration an
integral part of dual economy development in developing countries, he in fact
assumed that this process was a one-way movement, whereas Todaro (1969) and
Harris and Todaro (1970) viewed it as a circular movement following a repetitive
‘come-and-go’ pattern.
Second, there have been dissimilarities with respect to the pattern of these
transformations among countries and across time, which have made it difficult
to determine any stylised facts about the two types of transformations. While
Japan, Korea and some other countries accomplished their modernisation
through massive rural-to-urban migration decades ago, many developing
countries—especially in Latin America and East Asia—have been trapped by
‘urban diseases’ such as extreme poverty and slums in urban areas.
Third, the changes in China have been too fast for scholars and practitioners to
keep pace with. Conventional wisdom—such as the notion of a longstanding
and everlasting excessive labour force in rural areas—prevents observers from
understanding the potential for changing situations in labour demand and
supply. This is particularly relevant in China’s case.