Copyrighted material List of Figures. List of Tables. List of Contributors. Introduction

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1 Contents List of Figures List of Tables Preface List of Contributors viii x xii xiv Introduction 1 Turning Point in the Labor Surplus Economy: Concept and Approach 3 Ryoshin Minami I Theory of the turning point 4 II TP experiences from historical perspective 6 III Contents of this volume 7 References 13 Part I Lewisian Turning Point in Asian Countries 2 Turning Point in Japan: Structural Change in the Labor Market and Significance 17 Ryoshin Minami I Methodology for finding the turning point 18 II Real wages and wage differentials 20 III Relation between wages and labor productivity in agriculture 24 IV Factors and consequences of passing the turning point 31 V Conclusions 37 References 40 3 Structural Change of the Labor Market and the Turning Point in South Korea 42 Chang Nam Kim I Employment absorption and agricultural workforce 43 II Manufacturing real wages and labor supply elasticity 45 III Marginal labor productivity of agriculture 48 v

2 vi Contents IV Income distribution 51 V Conclusions 55 References 57 4 Agricultural Surplus Labor and Poverty in Indonesia 58 Susumu Hondai and Kazutoshi Nakamura I Wage rates in agriculture 59 II Labor productivity and real wages 63 III Changes in rural economy 69 IV Summary and some issues to be investigated 73 References 75 5 Labor Market and the Lewisian Turning Point in China 76 Ryoshin Minami and Xinxin Ma I Recent changes in the labor market 77 II Agricultural production function and surplus labor 81 III Outflow of agricultural labor and rural industrial employment 88 IV Concluding summary and prospect 90 References 98 Part II Structural Change of the Labor Market in China: Facts and Factors 6 Demographic Transition and Regional Employment 103 Fang Cai, Meiyan Wang and Yue Qu I Demographic change and the Lewisian turning point 103 II Impact of demographic transition on labor market 106 III Where will the labor-intensive industries go? 109 IV Demographic dividend in Inland 112 V Concluding remarks 116 References Regional Migration and Structural Change in the Labor Market 119 Makoto Takada and Xu Li I Composition of migration 120 II Migration in Sichuan and Guangdong 127 III Conclusions 133 References Foreign Direct Investment and Employment 136 Jin Du and Hiromi Ishizuka I Foreign investment in China 137

3 Contents vii II Framework and working hypothesis 142 III Quantitative analysis and results 145 IV Conclusions 152 References Labor Market Transformation in Shanghai 155 Shanping Yan I Literature review and Shanghai employment surveys 156 II Outlook of the labor market 159 III Econometric analysis on labor segmentation 164 IV Conclusions 176 References Labor Migration and Urban-Rural Income Disparity 181 Jinjun Xue and Wenshu Gao I The issues of income data and income statistics 182 II Rural migration and impact on income 184 III Model for estimating the urban-rural income gap 188 IV Re-estimating the urban-rural income gap 191 V Conclusions 193 References 195 Part III Summary and Conclusions 11 China s Turning Point from an East Asian Perspective: Prospective Recapitulation 199 Ryoshin Minami, Kwan S. Kim and Fumio Makino I Turning point in the East Asian context 199 II Consequences of the turning point 206 III Turning point and prospective outlook 210 References 213 Index 215

4 Introduction

5

6 1 Turning Point in the Labor Surplus Economy: Concept and Approach Ryoshin Minami In 2004 it was reported in Chinese media that migrant workers became scarce in the coastal urban areas and this pushed up their wages. At the same time, concerns were expressed about the possible negative effects on economic growth. China has long been heavily dependent on exports and foreign capital inflows: wage increases could deteriorate its global competitiveness in exports, thereby also discouraging capital inflows in the country. The migrant labor shortage, referred to as mingong huang, raised a heated debate among economists as to whether China had passed the Lewisian turning point (TP). However, there has been no reasonably comprehensive account of migrant worker shortages in urban areas, nor is there any empirically verifiable study on this issue. The Lewisian TP is a theoretical point in time in the Lewisian dualistic economy model when surplus labor in agriculture disappears due to its integration into the higher wage urban industries. Thus, the demarcation of TP cannot be determined without a methodologically valid empirical analysis of employment in agriculture and in urban industries. The question of China s passing TP aside, the important issue to deal with is how China s entering a period of turnaround would affect its own economy as well as the global economy. The most important consequences would be abrupt changes in labor market conditions caused by a rise in unskilled worker wages thereby reducing export competitiveness in labor-intensive activities and foreign direct investment in China s manufacturing industries. The present volume of collected essays surveys the process and implications of China s entering the Lewisian TP, focusing on her labor markets in particular. 3

7 4 Ryoshin Minami The key issues and contents shared by the collected papers of this volume are as follows: First, the possibility of China s passing TP is analyzed in one chapter. On empirical grounds, marginal labor productivity in agriculture is estimated from the production function and is then compared with agricultural worker wages (Chapter 5). Second, similar analyses are presented for other East Asian countries as comparison with the Chinese experience. Japan and South Korea are taken as examples of countries that have already passed the turning point (Chapters 2, 3 and 11). Indonesia, as a country which has not yet passed TP, is added for comparison (Chapter 4). Third, China s entering or passing TP is linked to changes in its labor market conditions. As key factors affecting the market conditions the articles in Chapters 6, 7 and 8 take into account demographic changes, regional migrations and foreign direct investment activities. The consequences of changes in the labor market are examined in the context of rural-urban income gaps and national income distribution (Chapters 9, 10 and 11). In Part I below this author provides an overview of the concept of the turning point as originally developed by Arthur Lewis. Part II presents a survey of historical experiences of turning point in various countries, especially East Asian countries. Part II I gives a summary of studies in the papers included in this volume. I Theory of the turning point In 1954 Lewis ( ) classified two strands of economic development theory: neoclassical and classical 1 ((1954), pp.400 1: reprint). According to him, the neoclassical model is relevant for developed economies, and for underdeveloped countries the classical approach is more appropriate. Combining both paradigms, Lewis formulated a general theory of development, i.e. the theory of turning point. Fei and Ranis (1961, 1964) restated Lewis s theory in the form of a mathematical model. The Lewis model consists of two sectors 2 ; one capitalist industry and the other subsistence agriculture. The former is characterized by a profitmotivated capitalistic mode of organization composed of entrepreneurs (or capitalists) and laborers. Profits are saved for reinvestment. In the subsistence sector composed mainly of farm households, they use their own labor and land. This sector, which has high rates of population growth, serves potentially as the main source of labor supply to the capitalist sector. Whereas real wages in developed countries as well as in the capitalist sector of developing nations are determined by the neoclassical theory

8 Turning Point in the Labor Surplus Economy 5 of the marginal productivity of labor, Lewis assumes subsistence earnings in the rural hinterland of the developing world. In the agricultural sector of developed countries wages are determined just like in the capitalist sector, whereas in developing countries marginal productivity of labor in the agricultural sector tends to be lower than subsistence level (SL) 3 ; which is the price of unlimited supplies of labor to the capitalist sector. As long as there is a sea of subsistence labor 4, its labor supply to the capitalistic sector remains perfectly elastic at a fixed subsistence wage level. As the capitalist sector develops, the number of workers in the subsistence sector dwindles, gradually raising the marginal labor productivity in this sector. When it begins to exceed SL, a shift of labor from the subsistence to the capitalist sector is followed by increases in labor productivity and wages in the subsistence sector. The capitalist sector is then faced with limited supplies of labor. In the phase of unlimited supplies of labor, wages are constant in the subsistence sector and in the phase of limited supplies of labor they tend to increase along with an increase in labor productivity. The point at which these two phases are divided is the turning point (TP). It is worth adding here a few comments on the determination of SL and wages at SL. SL may rise along with changes in the social and cultural structure. These changes include a diffusion of durable consumption goods such as radios and TVs, an expansion of education system, and urbanization of rural life. That SL may rise was recognized by the classical economists: Ricardo claimed that the natural price of labor is determined by the quantity of foods, necessaries and conveniences essential to him from habit, which tends to increase in the course of cultural development (Minami, 1973, footnote 12, p.27). Strictly speaking, the supply price of labor is different between two differing groups of rural households: householders (heads of households or estates) and dependent family workers. The supply price of the latter is SL, while that of the former consists of the residual of total payments to the latter from total output plus the imputed rental of farm houses. The Lewis model is applicable to a society in which the main body of emigrating labor consists of dependent family workers, as in the case with pre-war Japan (Ohkawa and Minami, 1964, footnote 2, p.4). Finally, we note a few key factors contributing to the country s arrival at its TP. Surplus labor in subsistence agriculture will dissipate with increases in labor productivity caused by use of machinery, improved agrarian technologies, expansion of cultivable land and plant breeding, and increased demand for rural labor from the capitalist sector.

9 6 Ryoshin Minami II TP experiences from historical perspective Many development economists have applied the Lewisian concept of turning point in tracing the historical evolution in the country s economic development. To name a few, Williamson argued that England passed its TP in the mid-19th century when real wages started to rise rapidly (1991, p.83). Kindleberger referred to a similar experience seen in the fourth quarter of the 19th century in the United States, and in 1960 in Germany (1967, pp.19 35). Nonetheless, these arguments were not based on rigorous statistical analyses. Statistical and substantial study of the turning point has been done for East Asian countries. For Japan, Lewis in his article of 1958 stated that the turning point would be reached in about ten years due to a decline in the birth rate after World War II (1958, p.29). Differing from Lewis, Fei and Ranis stated that Japan passed its TP immediately after World War I when the capital labor ratio in non-primary industry changed from a decrease to an increase and real wages in this industry started to increase rapidly (1964, pp.129, 263 4). Deficiencies in these studies will be pointed out in Chapter 2 of this volume. The author of this chapter used Japan s long-term economic time series 5 compiled by the Economic Research Institute, Hitotsubashi University, and concluded that Japan s TP occurred at around The 1960 turning point thesis for Japan (Minami, 1968, p.394, 1969, 1973, chapter 12) is summarized in Chapter 2. Soon after the appearance of TP research for Japan, studies on Taiwan and South Korea have followed: for Taiwan the turning point was demarcated as by Fei and Ranis (1975, p.49); as 1967 by Chen (1983, p.41) 6 ; for South Korea as by Fei and Ranis (1975, p.49) and as 1970 by Kim (1983, p.40). In the new study in Chapter 3 by the same author it was revised as Tsurumi (2004) noted that Singapore and Malaysia passed the turning point in 1976 and 1990 respectively, based on the general indices of labor market unemployment rate and opening ratio 8. As regards other Asian countries, there have also been a number of studies concerning surplus labor; for instance, on Indonesia by Hondai and Nakamura (Chapter 4 of this volume) and on Vietnam by Tho (2010, chapter 9). While no scholar has disputed the existence of surplus labor in China, the shortage of migrant workers in its coastal urban areas in recent years, mingong huang, causes a heated debate about whether it marks China entering or passing its TP. We conclude in Chapter 5 that China has not yet passed this point, and is now approaching its tipping point. The articles in Part II generally share this view.

10 Turning Point in the Labor Surplus Economy 7 III Contents of this volume This volume consists of three Parts: Part I is a collection of studies on four Asian countries, namely Japan, South Korea, China and Indonesia. Indonesia does not belong, geographically, to the East Asian region but is of interest for comparison since its economic conditions with overpopulated agriculture are similar to East Asian countries in their initial development stage. In Part II which contains five chapters, we survey labor market conditions in China from several aspects. Finally in Part III (Chapter 11), we recapitulate the main issues argued in this volume, and discuss the possibility and prospect of the turning point for China on the basis of the historical experiences observed in the other three comparison countries. In Chapter 2, which studies the turning point in Japan, wages for annual contract workers in agriculture are used as an index for subsistence sector wages. During the entire pre-war period, real wages, which were obtained by deflating nominal wages by the consumer price index, were virtually unchanged. They showed a remarkable increase in the post-war period as a result of the tightened labor market. The wage ratio of agriculture to non-agriculture, however, declined in the pre-war period and then increased in the middle of the 1950s. Moreover, the supply elasticity of labor migrating from the primary to the non-primary sector decreased toward the end of 1950s. We performed more rigorous analysis to demarcate the turning point by comparing real wages with marginal labor productivity in agriculture. Marginal productivity, which was calculated by multiplying average productivity data to output elasticities of labor estimated from the production function, proved to be smaller than wages in the prewar period while it remained very close or higher than wages in the post-war period. These results indicate that Japan passed the turning point some time during the post-war period. We were able to determine a strict demarcation of the turning point by surveying changes in annual estimates of the correlation between agricultural wages and average labor productivity, an index for marginal productivity, among prefectures. There were no significant correlations for the pre-war years. We found significant correlations since the end of 1950s, leading us to determine the demarcation of the turning point around The economic turnaround in Japan was not caused by a demographic factor. The growth rate of population actually declined. On the other hand, the economy grew very rapidly, increasing urban labor demands to absorb surplus labor in agriculture. An important consequence of this change in the labor market was an improvement in income distribution. The relative increase in unskilled

11 8 Ryoshin Minami worker wages gave rise to a corresponding rise in the relative income share of labor, improving income distribution in the whole economy. This may have contributed to steady democratization for post-war Japan. Chapter 3 deals with structural change and the turning point in South Korea. After the early 1960s, South Korean industry had a high capacity to absorb labor, resulting in a massive rural-urban migration of labor. Until the early 1970s, the labor migration took place without increases in the real wages of unskilled labor in the urban areas. From the early 1970s up to 2000, however, there was a high correlation between increases in real wages and labor migration. The marginal productivity of agricultural labor was calculated by using the labor production elasticity derived from the estimated production function. It was much lower than real wages until the mid-1960s. However, from the late 1960s and onward, it rapidly increased and reached the level of real wages by the early 1970s. Ever since then, both marginal productivity and real wages have shown steady increases at almost the same rate. The ratio of real wages of agricultural labor to the marginal productivity of labor was, on average, 1.35 from 1962 to 1971, and 0.99 from 1972 to This indicates that the South Korean economy passed the turning point approximately in The advent of the turning point had a positive influence on income distribution. From 1973 on, there was a constant increase in labor share in both the non-agricultural sector and the textile/clothes industry, which had a poor working environment. Thus, for the two decades just after after the turning point, that is from 1976 to 1996, there has been a constant decrease in the Gini coefficient. This supports the inverted U-shape hypothesis argued by Kuznets. In conclusion, in the process of passing the turning point in about 1973, the South Korean economy experienced a steady increase in real wages of unskilled labors in urban areas. Likewise, in rural areas, there was increase in household income as a result of an increase in the marginal productivity of agricultural labor. All of these events consequently led to even income distribution among different income classes in South Korea. Chapter 4 considers Indonesia. Indonesia has done remarkably well in the areas of both economic growth and poverty reduction. However, economic situations differ significantly among provinces. Some provinces have already developed well, while others have been left behind. This regional difference in economic development causes the variation of surplus labor among regions. The size of surplus labor in the Indonesian agricultural sector was estimated statistically by Shintani. He assumed a single agricultural

12 Turning Point in the Labor Surplus Economy 9 labor market for the entire country. But our observation shows that the agricultural wage rates were significantly different from a province to another. This indicates that surplus labor might have disappeared already in some provinces and that their agricultural wage rates might have reached to those of skilled workers. Based on this proposition, the marginal products of labor in the sector were estimated using 2003 and 2008 provincial rice paddy production data. The analysis shows that surplus labor disappeared completely only in Bali by 2008, but it has not disappeared in other provinces yet. Moreover we found that surplus labor still existed even in Bali in 2003 and that it disappeared sometime between 2004 and In addition, the ratio of poor households to total households became very small in Bali in 2008, while it was high in other provinces. When surplus labor disappears from a sector, its real wage rate will start to increase and per-capita consumption expenditure goes up above a subsistence level. Then, the ratio of the poor households to total households will go down considerably. Bali s poor households have declined along this process of economic development. Chapter 5 considers the labor market and the Lewisian turning point in China. Our research based on macro-data did not find any evidences for labor shortages in urban China. The country s unemployment rate did not show any decline, and the wage differentials between agriculture and urban industries increased even in the 2000s. In addition, the relative income share of labor in non-state enterprises has not increased during The marginal productivity of labor calculated from estimated agricultural production functions did not significantly increase for the three periods , and Consequently even in the most recent sub-period, marginal productivity of labor was lower than earnings (i.e. wages of rural industries and per capita net revenue of rural households) in agriculture; this indicates the continued presence of surplus labor. Nonetheless, the level of surplus labor showed a declining trend during the three periods. Up until 2008, China had not passed the turning point, but the country was approaching it. One of the factors contributing to the continuous presence of surplus labor in a rapidly developing economy is restricted migration from the traditional to the modern sector. In China labor market segmentation between rural and urban districts by the household registration system and the land contract system has restricted labor migration. It should be noted that the existence of surplus labor in future tends to expand the rural-urban income gap, further deteriorating income distribution for the economy.

13 10 Ryoshin Minami Chapter 6 is concerned with demographic transition and regional employment. Over the past 30 years, a great demographic transition has been occurring in China as the overall fertility rate has continually been declining. The long-lasting low fertility rate has given rise to changes in population age structure. Growth in the working-age population has been predicted to decline, becoming zero before 2015 and negative afterwards. That implies that without substantial enhancement of wages and other incentives, migrant workers will not be likely to fill the gap vacated by a reduced urban labor force. Based on a thorough examination of the demographic transition, this paper suggests the correct development path and mode for China during its transition period. As a result of demographic transition, we expect inevitable changes in labor market conditions. Rising real wages with increased urban labor demands will lead to rising labor costs for enterprises, thereby altering China s comparative advantage in labor-intensive industries. Given substantial interregional disparities in the level of development, there will be increased industrial labor movements, particularly among the eastern, central, and western regions within China. To mitigate any disruptive employment pressures from interregional migrations, government policy needs to be reoriented from creating quantity of jobs to improving the quality of employment. Moreover, such labor movements will change the demographic dividends of the central and western regions versus the whole country. Thus a deeper reform of hukou [the household registration system] will be called for to help the cities attract migrant workers by offering more social safety and welfare. Chapter 7 looks at regional migration and structural changes in the labor market. Labor flows from rural subsistence to the urban industrial sector prompted rapid economic growth in China. As the supply of migrant workers is currently becoming tight in coastal areas, it is important to examine what types of labor are lacking. This will help in distinguishing whether China is entering the Lewisian turning point or is experiencing a temporary decline in specific types of labor supply. Using the 2005 migration matrix, a migration function was estimated by using the variables accountable for regional labor movements. For instance, income disparity and level of market-orientation for the year 2000 were adopted as independent variables. The empirical results confirmed the relevance of the variables the author used. However, we couldn t confirm the determinants of employment probability. Because the results would depend on regional differences in growth patterns in employment, they analyzed the migrant labor markets in Sichuan and Guangdong provinces. Labor flow into

14 Turning Point in the Labor Surplus Economy 11 Guangdong province had distinct characteristics compared to Sichuan province. There was a wage convergence between the two districts in some industries, resulting in a decrease of migrant labor flow from Sichuan to Guangdong. It was concluded that the patterns of migration have been changing since In particular, the government s industrial promotion policy has been effective as an important cause of changes in the migration pattern, changing trends in labor demand and migration. Chapter 8 considers foreign direct investment (FDI) and employment. In a developing country like China, the ability to generate sufficient modern sector employment is one of the key factors in achieving economic success. This chapter examines the effect of job creation by foreign direct and indirect investments. The theoretical effects of foreign direct investment on jobs in domestically owned firms are highly uncertain. Two opposing types of effect are conceivable: (1) positive effects through business transactions and various types of spillovers include learning or demonstration effects, and (2) negative effects such as intense competition pressures that may force domestic firms to exit the region with much FDI inflow or downsize their workforce. Market expansion (both through exploiting export market and/or through gaining greater share in domestic market), choice of technology and changes in productivity are the main sources of job creation. By using the published data of the China Industrial Economy Statistical Yearbook (SBS), the authors created an input-and-output dataset of different firm groups in term of ownership, and analyzed FDI and job creation in China during they found that the job creation effect by foreign firms was associated with their outstanding growth performance, the labor-intensive nature of their technology and, in particular, their access to export markets. There also seemed to be a significant positive indirect effect on job creation in domestic non-state owned firms, presumably caused by spillovers and demonstration effects. To check the robustness of these main findings, an employment function was estimated by using provincial panel data for Our main hypothesis that FDI in China contributed to the country s job creation was supported by statistical analysis. In Chapter 9 the author gives details of a case study on the structural transformation of labor markets in large cities by using employment data in Shanghai for the years The data were collected in his own field survey. He compares employment conditions, such as degree and type of migration, rate of return in education, and impact

15 12 Ryoshin Minami of migration on income between people with and without registered permanent residence in Shanghai. New significant facts found include an increased trend in the number and proportion of people without registered permanent residence (TPFW) who work regularly; raising internal rates of return to education for TPFW; and decreasing differentials in the rate of return between TPFW and people with the registered permanent residence in Shanghai. Based on the findings on the relationship between income and human capital, the chapter concludes that a segmented labor market has shifted to an integrated labor market in Shanghai. At present, there still remain some income differentials and different job types between TPFW and those people with registered permanent residence. This may be mainly due to a gap in human capital development and other factors. It is as well to note that institutional discrimination against TPFW remains in terms of job opportunities and social security. Chapter 10 challenges a received theory about the urban-rural income gap in China. Income inequality is a serious problem facing China and the urban-rural income gap is thought to be the key factor contributing to overall income disparities. The official data show that the urban-rural gap increased from 2.2 times in 1980 to 3.23 times in However, our study based on the China Urban-Rural Income Gap Survey 2010 illustrates that the gap is overstated due to some statistical problems. The official Urban Household Survey did not include migrant households or migrant individuals in its samples. And the Rural Household Survey failed to record the income rural households received from migrant family members. Because of the missing information, the official data overstated urban household income by percent and understated rural household income by 13.3 percent. Using our adjustment method, we found that the real gap was 2.54 times in 2009, 24 percent smaller than the official figure (3.33 times). Chapter 11 recapitulates the key issues discussed in this volume concerning China s entering its turning point. Specifically, China s labor market conditions and changes in labor supply and demand in the context of the arrival of the Lewisian turning point are rigorously examined from a cross-sectional, comparative perspective using other East Asian countries (Japan, Taiwan and South Korea), which have already passed the Lewisian turning point. By using some indices for the development of agriculture; that is, ratio of primary industry in total employment, and cultivated land area per worker, capital stock per worker and so on, it is demonstrated that contemporary Chinese agriculture

16 Turning Point in the Labor Surplus Economy 13 is rather more underdeveloped compared to the other countries at the time of their turning point. This may signify the possibility that China has not yet passed its turning point. The discussions also include the possible socio-economic consequences for China based on what has occurred after the arrival of the turning point in Japan, Taiwan and South Korea. Increased regional population migration, more even income distribution, and relative price changes are typical phenomena that occurred in these economies. This chapter then concludes with a prospective analysis concerning the approaching turning point in China and suggests an imperative need for policy reforms to enable the country to stay on a sustainable development path in the future. Notes 1. The classical theory, according to Lewis, includes the worldviews of Smith, Malthus, Ricardo, and Marx. It is distinguished from the neoclassical view in assuming that the real wage is determined at the subsistence level (the natural price of labor in Ricardo and the cost of reproduction of labor in Marx). Lewis in his theory does not adopt Malthusian population theory. In this respect, his concept of the classics differs from the original. The neoclassics in Lewis interpretation includes not only the neoclassical school but also the Keynesian school. 2. For details of the Lewis theory, see Minami (1973), chapter It corresponds to the constant institutional wage in the theory of Fei and Ranis (1964), p Unlimited supplies of labor are identified as the surplus labor in this volume. See Minami (1973), p K. Ohkawa, M. Shinohara and M. Umemura (eds) Estimates of Long-term Economic Statistics of Japan since 1868, (14 volumes) (Tokyo: Toyo Keizai Shinposha). 6. Chen s study is included in Asamoto (2004). 7. For other studies, see Watanabe (1986), p These indices that reflect changes in the labor market conditions are not appropriate in demarcating the turning point. References Asamoto, T. (2004) Development Economics and Taiwan s Experience: Development Mechanism of Asian Economies (in Japanese) (Tokyo: Keiso Shobo). Chen, J. (1983) Economic Development and Structure of the Labor Market in Taiwan, (in Japanese), Asian Economies, Vol. 24, No. 5 (May). Fei, J. C. H. and G. Ranis (1961) A Theory of Economic Development, American Economic Review, Vol. 51, No. 4 (September). Fei, J. C. H. and G. Ranis (1964) Development of the Labor Surplus Economy: Theory and Policy (Homewood, Illinois: R.D. Irwin).

17 14 Ryoshin Minami Fei, J. C. H. and G. Ranis (1975) A Model of Growth and Employment in the Open Dualistic Economy: The Case of Korea and Taiwan, Journal of Development Studies, Vol. 11, No. 2 (January). Kim, C. N. (1983) Economic Development and Structure of Labor Market in Korea, (in Japanese), Asian Studies, Vol. 30, No. 2 (July). Kindleberger, C. P. (1967) Europe s Postwar Growth: The Role of Labor Supply (Cambridge, Mass.: Harvard University Press). Lewis, W. A. (1954) Economic Development with Unlimited Supplies of Labour, Manchester School of Economic and Social Studies, Vol. 22, No. 2 (May). Reprinted in A. N. Agarwala and S. P. Singh (eds), The Economics of Underdevelopment (London: Oxford University Press), Lewis, W. A. (1958) Unlimited Labour: Further Notes, Manchester School of Economic and Social Studies, Vol. 26, No. 1 (January). Minami, R. (1968) The Turning Point in the Japanese Economy, Quarterly Journal of Economics, Vol. 82, No. 3 (August). Minami, R. (1969) The Supply of Farm Labor and the Turning Point in the Japanese Economy, in K. Ohkawa, B. F. Johnston and H. Kaneda (eds), Agriculture and Economic Growth: Japan s Experience (Tokyo: University of Tokyo Press). Minami, R. (1973) The Turning Point in Economic Development: Japan s Experience (Tokyo: Kinokuniya). (Chinese translation was published from Social Sciences Academic Press in 2008.) Ohkawa, K. and R. Minami (1964) The Phase of Unlimited Supplies of Labor, Hitotsubashi Journal of Economics, Vol. 5, No. 1 (June). Tho, T. V. (2010) Development and Transition in the Vietnamese Economy: New Doi Moi for Avoiding the Middle Income Trap (in Japanese) (Tokyo: Keiso Shobo). Tsurumi, M. (2004) Economic Growth and Labor Market in East Asia: About the Philipp s Curve, (in Japanese), Institute of Comparative Economic Studies, Hosei University and K. Odaka (eds), Comparative and Quantitative Studies on Modern Asia (Tokyo: Hosei University Press), chapter 10. Watanabe, T. (1986) Development Economics: Economics and Contemporary Asia (in Japanese) (Tokyo: Nippon Hyoronsha). Williamson, J. G. (1991) Inequality, Poverty and History (Oxford: Blackwell Publishing Ltd.).

18 Index annual contract workers, 20, 37, 38 arable-land intensity, 204 average product(ivity) of labor, 85, 93 Badan Pusat Statistik (BPS), 60, 61 business cycles, 20 capital intensity, 204 cohort analysis, 129 collective land ownership, 210 comparative advantage, 146 constant return to scale (CRTS), 63, 68, 149 Cost Basic Needs Method, 61 demographic dividend, 112 demographic transition, 103 domestic flying geese, 111 dual economy (dualistic model), 17, 20, 42, 92, 103, 104, 116, 155, 199 earnings defferential decomposition method, 164 education-earnings curves, 170 elasticity of labor supply, 19, 23, 24, 29, 37, 39, 42, 43, 46, 54, 68, 82, 107 elderly dependency ratio, 115 employment absorption, 43 Employment Promotion Law, 157 Engel coefficient, 208 factor endowment, 43 Fei, J. C. H., 4, 6, 17, 20, 38 fertility rate, 104 floating population, 155 foreign invested enterprises, 136, 137, 146 Gini coefficient, 33 35, 51, 53, 55, 207, 208, 212 greenfield investment, 142 growth accounting, 148 high-yielding varieties (HYV), 46, 63, 68 household survey system, 182 hukou (household registration system), 9, 10, 91, 117, 155, 165, 168, 176, 205, 210, 211 human capital, 164, 168, 170, 176 income distribution, 33, 34, 36, 38, 39, 51, 55, 207, 211 income gap, 183, 188 informal sector, 92, 137, 161, 171, 178 inverted U-shape hypothesis, see Kuznets hypothesis Jorgenson, D. W., 20, 38 Kindleberger, C. P., 6 Kuznets hypothesis, 8, 35, 51, 54, 55, 210 Kuznets, S., 35, 93 Labor Contract Law, 157 labor cost, 109 labor market segmentation, 91, 120, 155, 164, 170, 178 labor shortage, 35, 90, 103, 107, 111, 116, 121, 133, 165, 201, 202, 204, 208 land contract system, 91 Lewis, W. A., 4 6, 13, 17, 31, 36, 58, 60, 63, 73, 93, 96, 103, 116, 119, 143, 194, 201 lifetime employment, 54 limited supplies of labor, 5, 13, 17 linkage effect, 142 long swings, 20 Malthus, T. R., 13 marginal product(ivity) of labor, 5, 7 9, 17, 18, 29, 43, 48 50, 63, 68, 77,

19 216 Index Marx, K., 13 migration, 13, 45, 89, 104, 112, 119, 133, 176, 183, 188, 191, 194, 206 mingong huang (shortage of migrant workers), 6, 77, 78, 119, 123, 127, 201 minimum living standard, 52 Myint, H., 143, 152 neoclassical theory, 4 one-child policy, 103 Oshima, H., 39, 211 population growth rate, 116 population migration function, 123 poverty line, 58, 60, 62, 71, 74 production function, 25, 48, 55, 63, 64, 68, 74, 81, 149 property ownership, 91 Ranis, G., 4, 6, 17, 20, 38 real wages, 18, 20, 21, 37, 60, 61, 69, 77 relative income share of labor, 33, 34, 36, 39, 51, 53, 76, 80, 93, 109 Ricardo, D., 5, 13 Saemaeul Undong (movement of Building of New Village), 50, 54 self-evaluated wage rate, 73 seniority rule, 54 Smith, A., 143 social capability, 36 spillover effect, 142 subsistence level, 5, 13, 18, 60, 62, 71, 77, 86, 91 surplus labor, 3, 13, 17, 22, 23, 31, 33, 35, 36, 38, 39, 42, 43, 52, 55, 58, 63, 73 technological progress, 29 total factor productivity (TFP), 148 turning point (TP), 18 20, 29, 31, 33, 35 39, 42, 43, 51, 52, 54, 55, 58, 60, 71, 77, 93, 103, 109, 117, 119, 194, 199, 204, 208 unemployment rate, 37, 69, 71, 77, 92 unlimited supplies of labor, 5, 13, 17, 19, 20, 46, 55, 79, 103, 109, 116, 199, 204, 207, 210 urbanization, 207 vent-for-surplus, 143, 147, 151 wage differentials, 18, 22, 23, 37, 79, 80, 205, 210 Williamson, J., 6 Working age population, 105 World Trade Organization (WTO), 141