Citation
Cao, Kang Hua (2007). Structural Change and the Sustainability of Chinese Economic Growth. .Abstract
This paper examines the role of agriculture during the reform periods of China after 1978. I estimate the "shadow wage" of Chinese farmers from micro-level data and the result shows that the labor input of Chinese agriculture decreases at a rate of 2% annually. I combine this Ögure with the growth of output, capital, and land, and a growth accounting exercise demonstrates that the total factor productivity growth of agriculture is 5.4%. This number conÖrms the belief that the e¢ ciency gain of Chinese economy during the reform periods mainly lies in agriculture. I develop and calibrate a two-sector general equilibrium model with subsistent consumption. The model reveals counterfactual implications that agricultural productivity has no long-run effects.