Trade liberalisation and off-farm employment of the rural labour force: Evidence from China’s WTO accession

Abstract

AbstractThis paper investigates the impact of trade liberalisation on the rural labour force in China, with a particular focus on labour mobility and off-farm employment. The analysis utilises micro data from the National Fixed Point Survey and Chinese manufacturing firms. The identification strategy relies on combining information on the initial province labour and product market structure with the exogenous tariff reduction schedule over WTO accession and distinguishes between output markets and intermediate input tariffs. The results are as follows: First, the reduction of output tariffs does not promote rural labour mobility, whereas the reduction of input tariffs has a positive impact on mobility. Additionally, output tariffs reduce off-farm employment income and time, while input tariffs increase them. This conclusion is applicable only to low-skilled labour. Second, the tariff reduction significantly affects total wages and the number of employees in firms, as supported by macro data. This suggests that tariff cuts have implications for firm employment and, consequently, rural employment. Third, tariff cuts have a more pronounced effect on young individuals, those with lower levels of education, and the female workforce. Therefore, the interests of these groups should be fully considered in the process of further import liberalisation and tariff reduction.KEYWORDS: Trade liberalisationlabour mobilityoff-farm employmentJEL CLASSIFICATIONs: F14F16J20Q10 AcknowledgementThe authors gratefully acknowledge the helpful reviews and comments from the editors and anonymous reviewers, which improved this manuscript considerably. Certainly, all remaining errors are our own.Disclosure statementNo potential conflict of interest was reported by the author(s).Notes1 According to the 《Migrant Worker Monitoring Survey Report 2010》 released by the National Bureau of Statistics.Additional informationFundingThis work was supported by the following funding sources: Zhejiang Provincial Philosophy and Social Sciences Planning Project [grant number: 24NDQN17Z]; National Social Science Foundation of China [grant numbers: 22BJY011, 18ZDA045, 21&ZD077]; National Natural Science Foundation of China [grant numbers: 72173085, 71973094, 71833003]; Social Science Pre-Research Zhejiang University of Technology [grant number: SKY-ZX-20220249]; Humanities and Social Science Research Project of Zhejiang Education Department [grant number: Y202248789].