Tas the Lewisian Turning Point Arrived in China？- An Empirical Study of China＇s Dual Economy Transition in Labor Market Based on Data of 284 Cities

Labor shortage and the rise of wages in China have generated heated debate on the arrival of the Lewisian Turning Point. Based on an empirical study of macroeconomic data for 284 prefecture-level cities, this paper argues that the dual economy transition in China involves the coexistence of urbanization, industrialization and open economy. However, China has not yet arrived at the Lewisian Turning Point, because wage gaps between different industries and regions still exist and surplus labor is still being attracted to the labor-intensive manufacturing and tertiary industries in the eastern provinces. External economic shock and the mismatch between industrialization and urbanization are the primary causes of the coexistence of labor surplus and labor shortage.

Has China Become A Dual-Sector Economy？ An Empirical Analysis on Whether China Has Reached the Lewis Turning Point

Both the labor shortage that began in 2000 and the wave of migrant workers returning to the countryside in 2009 sparked intense debates among scholars about whether China had reached the Lewis turning point. Based on agricultural economics and the dual-sector model the author conducted an empirical analysis and arrived at the followingfive conclusions. First, the dual economy is structured differently among agricultural industrial sectors and regions. Second, surplus labor still exists in the backyard stockbreeding sector （hogs, beef cattle, sheep, and dairy cattle）, implying that it has still not passed the first turning point. Third, the sector of production of staple food grains and minor cereals has passed the shortage point, but is still far from the commercialization point. Fourth, cash crop production has passed out of the subsistence sector into the capitalist sector. Fifth, regional differences are stark. the majority of China＇s eastern region is either approaching or has surpassed the commercialization point, whereas the central and western regions have not.

On China＇s Economy： A Tentative Research from a Dual Visual Angle

Most economists approach the economy of China from a single visual angle considering it as a special economic modality of transition economy. Based on the analysis from the single visual angle, the paper puts forward a dual visual angle treating China＇s economy as one of both transition and transformation features, and attempts to research it from this dual visual angle.

Analysis of China＇s Unequal Income Distribution from the Perspective of Functional Income Distribution

China＇s unequal income distribution is to a large extent expressed in unequal functional income distribution, that is, as China＇s economy develops, the share of wage income in national income falls. The unlimited supply of labor under China＇s current dual economic structure is the major reason for this. In a disequilibrium dynamic model framework with Keynesian features, empirical analysis shows that the unlimited supply of labor not only prevents wages from responding to supply and demand situation in the labor market, but also makes them insensitive to labor productivity and price changes. This suggests that when there is a rise in labor productivity or prices following economic growth, the rise in wages may not be sufficiently marked. The benefits derived from economic growth or labor productivity increases have been, to a very large extent, converted into profits and not wages. Therefore, if we are to reverse China＇s worsening income distribution, our fundamental path should remain the maintenance of high-speed growth and the acceleration of urbanization and industrialization so that surplus rural labor can be absorbed as soon as possible.