Labour Market Reform, Rural Migration and Income Inequality in China - A Dynamic General Equilibrium Analysis

Using a dynamic CGE model this paper explores the effects of reform of the household registration (hukou) system in China on economic growth and rural - urban income equality over the period 2010 to 2020. It addresses the specific questions whether reform of the household registration system together with the removal of other institutional barriers to rural labour mobility can accelerate rural labour mobility, and whether the enhanced labour mobility can improve the efficiency of the allocation of labour with the result of increasing labour productivity and reducing rural-urban income inequality.