The Transition from Dualistic Economy in China: Theory and Models-A Model Different from Western Classical Economics


Abstract
The spring of 2004, China's rural areas still exist in infinite supply of agricultural labor conditions, a "labor shortage" is one of the major agricultural labor force to absorb the non-agricultural sectors pay workers low wages, which makes Western classical and neoclassical two yuan economist's dual economic structure transformation model has suited China's national conditions. We thus established the classical hypothesis of non-full dual economic structure transformation model that the use of wage incentives function, which can be achieved by raising the wages of the common growth of wages and profits, thus ensuring the sustainability of agricultural labor force, until our complete the dual economic structure transformation, the rural industrialization and urbanization. During the spring 2004, while we have abundant supply of labor coming from rural areas, the shortage of temporary workers became an urgent problem. One of the reasons is the lower wage paid by the employers in non-rural areas. This phenomenon cannot be explained by the classical of neo-classical models in western economic theories. The model built based upon a non-perfect-classical assumption in this paper provides a different explanation: through the stimulation wages, or through the joint growth of both wage and profit, we can achieve a sustainable transition of rural labors, until the complete transition form dualistic economic structure into the Industrialization and urbanization in rural areas
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