Agric. Econ. - Czech, 2020, 66(3):129-139 | DOI: 10.17221/53/2019-AGRICECON

Rural-urban migrants' remittances and wage inequality: Evidence from ChinaOriginal Paper

Yunyun Wu, Xiaochun Li*
Department of Economics, Nanjing University, Nanjing, China

There is a link between rural-urban remittances and wage inequality. However, the existing literature sheds little light on this topic. In this study, we establish a three-sector general equilibrium model to investigate the effects of rural-urban migrants' remittances on wage inequality. Further, we use Chinese macroeconomic data to calibrate the parameters and conduct analysis with numerical simulation. We find that, when rural-urban migrants raise their remittance rate, wage inequality between skilled labour and the urban formal sector remains unchanged in the sector-specific capital case but narrows in the sector-mobile capital case. Moreover, in the sector-specific case, skilled and unskilled wage inequalities, wSY and wSZ, decrease at the same rate as the urban-rural wage inequalities, wXY and wXZ, respectively. In the mobile case, however, the former declines faster than the latter.

Keywords: endogenous remittance; externality; less-developed country; rural-urban migration; wage inequality

Published: March 31, 2020  Show citation

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Wu Y, Li X. Rural-urban migrants' remittances and wage inequality: Evidence from China. Agric. Econ. - Czech. 2020;66(3):129-139. doi: 10.17221/53/2019-AGRICECON.
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