When Globalization Meets Urbanization: Labor Market Reform, Income Inequality, and Economic Growth in the People’s Republic of China

The development path that the People’s Republic of China (PRC) has been following during the past thirty years has led to both internal and external economic imbalances, and is now greatly challenged by the global crisis. This unbalanced growth path was primarily a result of the PRC’s labor market reform which took the years of the mid-1990s as its turning point. Before the mid-1990s, the scale of rural-to-urban migration was limited, but it has grown dramatically since then. 1996 also saw drastic employment restructuring in urban areas of the PRC. [ADBI Working Paper 162]