1. Module 6 Social viability Tian Weiming, Liu Xiumei and Kang xia China Agricultural University

2. Hypothetic relationship between agriculture and social viability  By design, ROA project intends to address the issues associated with rural-urban migration  Excessive urbanization problems urban congestion urban pollution urban crimes  Declining rural sector Land left idle Dying rural towns  Growth of agricultural sector helps to maintain people in rural areas and thus to avoid “excessive urbanization” problems.

3. Perceptions of the situation in China  Problems of excessive urbanization do exist;  However, China’s urbanization lags far behind;  Under-urbanization problems are more prevalent and severe:  Excessive exploitation of natural resources  Underutilization of rural labor and low rural income  Prevalence of rural poverty and inferior living conditions of rural people  Incapability for rural households to accumulate physical and human capitals  High rural-urban income disparities, which are related to crimes by rural residents and social unrests

4. Changes in rural and urban incomes (1978 prices)

5. Income disparity among regions and between urban and rural areas (2002)

6. Changing sources of rural net income

7. Design of study under this module  It is felt that social viability role of agriculture should be considered within a framework of coherent development of rural and urban societies.  Problems associated with both excessive urbanization and under-urbanization need to be addressed together.  Therefore, the primary issue for this module is to identify what are the major mechanisms in China that link developments of rural sector and urban sector.

8. Relationships between different definitions of population in China Population living in the urban areas Population living in the rural areas Registered urban residents Agricultural residents living in suburb areas Rural migrants staying in urban areas Part-time farm population Full-time farm population Urban population Rural population Non-agri. population Agricultural population

9. Major issues under investigations  Comparative labor productivities  Rural labor in farming and off-farm jobs  Non-rural labor  Determinants of rural labor transfer  Pull-side factors  Push-side factors  Resistant factures  Socioeconomic impacts of the transfer  Income disparity

10. Methodology  Descriptive analyses based on available statistics and literatures  Econometric modeling  Production functions that assess contribution of different types of labor to GDP;  Behavioral functions that describe transfer of rural labor away from local agriculture;  Descriptive functions that show impacts of rural labor transfer on rural income and urban-rural income disparity.

11. Major findings: GDP Production functions  Transferred rural labor has a higher productivity in off-farm jobs than in farming;  However, transferred rural labor is less productive compared with their urban counterparts;  Overall, rural labor transfer contributes to GDP growth with significance.  There are indications that transferred rural laborers are superior to those not transferred in terms of their productivities in both farming and non-farm activities.

12. Comparison of marginal labor productivities

13. Major findings: Rural labor use and transfer  Rural labor are less likely to transfer to off-farm jobs in regions with more land resource.  Rural labor tend to take off-farm jobs within home county in regions with higher level of education.  Rural labor tend to take off-farm jobs within home province in regions with more developed non- agricultural sectors.  The effects of rural-urban wage ratio are not consistent with prior expectation and less significant in general.

14. Major findings: Rural labor use and transfer  Rural labor are more likely to transfer locally in regions where rural households own more productive assets.  Rural labor are more likely to transfer out home county but with home province in regions where non-state economy is well developed.  Rural labor are less likely transfer to off-farm jobs within home provinces when unemployment is high. Instead, they tend to go to other provinces for jobs.  Rural labor are more likely to transfer to off-farm jobs within county in regions with higher rate of urbanization. Otherwise, they may either stay on farm or move to other provinces.

15. Major findings: Socioeconomic impacts  Rural per capita income is positively related to:  Household productive assets  Land resource (Effect is insignificant when land area is limited)  Rural labor education  Share of labor transferred to off-farm jobs.  Rural-urban income disparity can be narrowed by both increased availability of farm resources and transfer of rural labor to off-farm jobs.

16. Policy implications  Labor input is still important in agricultural production and out-transfer of farm labor, especially those better educated, may generate negative impacts on agricultural production;  Growth of agricultural production has a role to retain rural people and thus produces a positive externality;  However, given the resource endowments of rural households and the conditions of agricultural market, there is little hope for China to raise rural income through farming;

17. Policy implications  Such an undesirable process can be self- enhanced through:  declining of rural education and other social services  slow accumulation of physical and human capital of rural households  weak fiscal capacity in the rural regions  underdevelopment of rural infrastructure  …

18. Policy implications  Consequently, retaining rural labor on farm will inevitably result in a growing polarization of urban and rural societies and the associated social tensions ;  Therefore, while there exist excessive urbanization problems in China, on balance, retaining rural labor on land has more negative social consequences.  The Chinese government needs to take measures to accelerate rural labor transfer while manage the process properly, so as to avoid undesirable consequences.  This requires fundamental reforms of the policy-making process, laws and social institutions. as well as empowerment of the rural people.

19. Thank you for attention and welcome for comments