Coexistence of surplus labor and the Lewis turning point in China: a unitary household decision-making model study

Authored by Huai Yu Liu, Shinan Cao, Jing Deng

Date Published: 2013-10

DOI: 10.1007/s11403-012-0095-4

Sponsors: No sponsors listed

Platforms: No platforms listed

Model Documentation: Other Narrative Mathematical description

Model Code URLs: Model code not found

Abstract

This paper discusses the underlying relationship between surplus labor and the Lewis turning point in the duration of rapid economic growth in China. An agent-based model was proposed for studying the Lewis turning point and labor resource allocation, in which the decision-making interactions were made among the members of a household. This model differs from traditional development economics theory in which only an individual's behavior is considered. How peasant households allocate their human capital to maximize the utility of a household unit was investigated on the basis of the unitary principle under the assumption of risk aversion. The roles of living expenses, subsidies and income adjustment factors were also considered. Our results revealed the paradoxical phenomenon that rural surplus labor and the Lewis turning point coexist.

Tags

Agent-based model Labor resource allocation Lewis turning point Surplus labor Unitary model