The Declining Share of Agricultural Employment in the People’s Republic of China: How Fast? | Asian Development Bank

The Declining Share of Agricultural Employment in the People’s Republic of China: How Fast?

Publication | November 2014
The Declining Share of Agricultural Employment in the People’s Republic of China: How Fast?

The transfer of workers out of low-productivity agriculture is a fundamental pillar of the People’s Republic of China’s aspirations to progress and eventually become a high-income economy.

Rapid economic growth has long been viewed by the People’s Republic of China's (PRC) policy makers as the most powerful antidote to reform-induced job loss. For an economy that needs about 10 million new jobs each year to keep its urban unemployment rate constant, any growth slowdown is a major concern.

This paper hypothesizes that the drivers of this decline have been the increase in income per capita, industrial value added, foreign direct investment, and domestic credit. An Autoregressive Distributed Lag Model was used to test the strong exogeneity of the regressors so that it can be used for forecasting. Results indicate that the share of employment in agriculture in the PRC will decline to about 24% by 2020, the end of the 13th Five-Year Plan (2016–2020). It is also estimated that the PRC’s employment share will reach 5% by 2042–2048, approximately the same as in advanced economies today.

Contents 

  • Tables and Figures
  • Abstract
  • Introduction
  • Empirical Strategy
  • Estimation, Discussion of the Results and Forecasting
  • Conclusions
  • References