Startseite The Impacts of Rural Property Rights on Urban Unemployment, Wage Inequality, and Welfare in Developing Countries
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The Impacts of Rural Property Rights on Urban Unemployment, Wage Inequality, and Welfare in Developing Countries

  • Jiancai Pi EMAIL logo , Yang Ge und Jun Yin
Veröffentlicht/Copyright: 29. November 2016
The B.E. Journal of Economic Analysis & Policy
Aus der Zeitschrift The B.E. Journal of Economic Analysis & Policy Band 17 Heft 1

Abstract

This paper establishes a three-sector general equilibrium model to explore how rural property rights influence urban unemployment, skilled-unskilled wage inequality and social welfare in developing countries. Strengthened rural property rights generate the rent-gaining effect and the productivity-enhancing effect, and the interaction of these two effects determines the changes of urban unemployment, skilled-unskilled wage inequality and social welfare. In addition to the aforementioned two effects, the agricultural sector’s wage elasticity of unskilled labor demand also matters for the change of wage inequality.

Keywords: rural property rights; urban unemployment; skilled-unskilled wage inequality; social welfare; general equilibrium model
JEL Classification: E24; J31; P26

Acknowledgement

We would like to thank the editor Mariapia Mendola for her sincere encouragement and Yu Zhou for his helpful assistances. We are very grateful to two anonymous reviewers for their insightful comments and detailed suggestions on improving this paper. We also acknowledge the financial support provided by the Program for New Century Excellent Talents in University, the Fundamental Research Funds for the Central Universities, and the Collaborative Innovation Center for China Economy. Any remaining errors are ours.

Appendix A. Proof of Lemma 1

Total differentiation of eqs (8)–(10) and (12) yields the following reduced linear equations system:

(A∂2FR∂(LR)210A∂2FR∂TR∂LR01(1−μ)rTT¯(LR)2+LUw¯L(L¯U+LTR)21(1−μ)T¯LR)(dLTRdwLdrT)=(A′FLRA′FTRrTT¯L¯RLTRLR+rTT¯L¯R)dμ.

The determinant of the coefficient matrix of the above equations system is denoted as ΦΦ, where Φ=1−μrTTˉLR2+LUwˉLLˉU+LTR2−μA∂2FR∂2LR>0Φ=1−μrTTˉLR2+LUwˉLLˉU+LTR2−μA∂2FR∂2LR>0 .

Using the Cramer’s rule to solve the above linear equations system, we can get:

dLTRdμ=1ΦrTTˉLˉRLTRLR+rTTˉLˉR−A′FLR+1−μTˉLRFTR,
LˆTRμˆ=μLTR⋅dLTRdμ.

Hence, sign (LˆTRμˆLˆTRμˆ) = sign (dLTRdμdLTRdμ). Then, we can immediately obtain Lemma 1.

Appendix B. Proof of Proposition 2

As suggested by the analysis of Proposition 1, the equilibrium value of KUKU is irrelevant to μμ . Given the capital market clearing condition (i. e., eq. (14)), we know that the equilibrium value of KSKS is also irrelevant to μμ . From eqs (3) and (13), we have dwHdμ=0dwHdμ=0 and hence wˆHμˆ=0wˆHμˆ=0 .

Then, we have wˆH−w˜ˆLμˆ=−w˜ˆLμˆwˆH−w˜ˆLμˆ=−w˜ˆLμˆ . Furthermore, we can obtain: sign (wˆH−w˜ˆLμˆwˆH−w˜ˆLμˆ) = sign (−w˜ˆLμˆ−w˜ˆLμˆ) = sign (−dw˜Ldμ−dw˜Ldμ).

Differentiating w˜Lw˜L with respect to μμ, we can get:

dw˜Ldμ=1LˉU+LˉRLRdwLdμ+wLdLRdμ.

From the reduced linear equations system in Appendix A and eq. (12), we have:

dLRdμ=−1ΦrTTˉLˉRLTRLR+rTTˉLˉR−A′FLR+1−μTˉLRFTR,
dwLdμ=A∂2FR∂2LRA′FLR+1−μTˉLRFTR−rTTˉLˉRLTRLR+rTTˉLˉRΦ+A′FLR.

Hence, dw˜Ldμdw˜Ldμ can be reduced to:

dw˜Ldμ=LRLˉU+LˉR−A∂2FR∂2LReLWR+1rTTˉLˉRLTRLR+rTTˉLˉR−A′FLR+1−μTˉLRFTRΦ+A′FLR.

When −1<eLWR<0−1<eLWR<0, if rTTˉLˉRLTRLR+rTTˉLˉR>A′FLR+1−μTˉLRFTRrTTˉLˉRLTRLR+rTTˉLˉR>A′FLR+1−μTˉLRFTR, then dw˜Ldμ>0dw˜Ldμ>0 (i. e., w˜ˆLμˆ>0w˜ˆLμˆ>0) and dwH−dw˜Ldμ<0dwH−dw˜Ldμ<0 (i. e., wˆH−w˜ˆLμˆ<0wˆH−w˜ˆLμˆ<0); and if A′FLR+1−μTˉLRFTR−rTTˉLˉRLTRLR+rTTˉLˉR>−ΦA′FLRA∂2FR∂2LReLWR+1A′FLR+1−μTˉLRFTR−rTTˉLˉRLTRLR+rTTˉLˉR>−ΦA′FLRA∂2FR∂2LReLWR+1, then dw˜Ldμ<0dw˜Ldμ<0 (i. e., w˜ˆLμˆ<0w˜ˆLμˆ<0) and dwH−dw˜Ldμ>0dwH−dw˜Ldμ>0 (i. e., wˆH−w˜ˆLμˆ>0wˆH−w˜ˆLμˆ>0).

When eLWR<−1eLWR<−1, if A′FLR+1−μTˉLRFTR>rTTˉLˉRLTRLR+rTTˉLˉRA′FLR+1−μTˉLRFTR>rTTˉLˉRLTRLR+rTTˉLˉR, then dw˜Ldμ>0dw˜Ldμ>0 (i. e., w˜ˆLμˆ>0w˜ˆLμˆ>0) and dwH−dw˜Ldμ<0dwH−dw˜Ldμ<0 (i. e., wˆH−w˜ˆLμˆ<0wˆH−w˜ˆLμˆ<0); and if rTTˉLˉRLTRLR+rTTˉLˉR−A′FLR+1−μTˉLRFTR>ΦA′FLRA∂2FR∂2LReLWR+1rTTˉLˉRLTRLR+rTTˉLˉR−A′FLR+1−μTˉLRFTR>ΦA′FLRA∂2FR∂2LReLWR+1, then dw˜Ldμ<0dw˜Ldμ<0 (i. e., w˜ˆLμˆ<0w˜ˆLμˆ<0) and dwH−dw˜Ldμ>0dwH−dw˜Ldμ>0 (i. e., wˆH−w˜ˆLμˆ>0wˆH−w˜ˆLμˆ>0).

Appendix C. Proof of Proposition 3

Totally differentiating eq. (20) with respect to μμ yields:

Wˆμˆ=μW1−Hˉ2−LUwˉLLU+LUN2dLUNdμ+LˉR2Hˉ+LˉRrTTˉLˉR+μTˉLˉRdrTdμ.

From the reduced linear equations system in Appendix A and eq. (11), we have:

dLUNdμ=1ΦrTTˉLˉRLTRLR+rTTˉLˉR−A′FLR+1−μTˉLRFTR,
drTdμ=A∂2FR∂TR∂LRA′FLR+1−μTˉLRFTR−rTTˉLˉRLTRLR+rTTˉLˉRΦ+A′FTR.

Hence, WˆμˆWˆμˆ can be reduced to:

W^μ^=μW(Γ{A′[FLR+(1−μ)T¯LRFTR]−(rTT¯L¯RLTRLR+rTT¯L¯R)}Φ+(2H¯+L¯R)(rTT¯+μT¯A′FTR))

where Γ=1−Hˉ2LUwˉLLU+LUN2+2Hˉ+LˉRμTˉA∂2FR∂TR∂LR>0Γ=1−Hˉ2LUwˉLLU+LUN2+2Hˉ+LˉRμTˉA∂2FR∂TR∂LR>0 .

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Published Online: 2016-11-29

© 2017 Walter de Gruyter GmbH, Berlin/Boston

Artikel in diesem Heft

  1. Research Articles
  2. The Market Value of R&D in Emerging Economies: Evidence from India
  3. Are You What You Eat? Healthy Behaviour and Risk Preferences
  4. The Impacts of Rural Property Rights on Urban Unemployment, Wage Inequality, and Welfare in Developing Countries
  5. Lobbying as a Guard against Extremism
  6. Information Acquisition in Vertical Relations
  7. What Extent of Welfare Loss is Caused by the Disparity between Perceived and Scientific Risks? A Case Study of Food Irradiation
  8. Characteristics and Employment of Applicants for Social Security Disability Insurance over the Business Cycle
  9. Preferences Toward Leniency under Mandatory Criminal Sentencing Guidelines: Role-in-the-Offense Adjustments for Federal Drug Trafficking Defendants
  10. The Effect of Kinship Placement Laws on Foster Children’s Well-Being
  11. Are Immigrants in Favour of Immigration? Evidence from England and Wales
  12. Competition, Product Innovation and Licensing
  13. The Impact of Educational Mismatches on Wages: The Influence of Measurement Error and Unobserved Heterogeneity
  14. Education Outcomes of Children of Asian Intermarriages: Does Gender of the Immigrant Parent Matter?
  15. Letters
  16. Endogenous Leadership in Tax Competition: A Combination of the Effects of Market Power and Strategic Interaction
  17. Can Catastrophic Long-Term Care Insurance Policies Increase Private Insurance Coverage and Reduce Medicaid Expenditure?
  18. Getting Girls to Schools! – Assessing the Impacts of a Targeted Program on Enrollment and Academic Performance
https://doi.org/10.1515/bejeap-2015-0225
Schlagwörter für diesen Artikel
rural property rights; urban unemployment; skilled-unskilled wage inequality; social welfare; general equilibrium model

Artikel in diesem Heft

  1. Research Articles
  2. The Market Value of R&D in Emerging Economies: Evidence from India
  3. Are You What You Eat? Healthy Behaviour and Risk Preferences
  4. The Impacts of Rural Property Rights on Urban Unemployment, Wage Inequality, and Welfare in Developing Countries
  5. Lobbying as a Guard against Extremism
  6. Information Acquisition in Vertical Relations
  7. What Extent of Welfare Loss is Caused by the Disparity between Perceived and Scientific Risks? A Case Study of Food Irradiation
  8. Characteristics and Employment of Applicants for Social Security Disability Insurance over the Business Cycle
  9. Preferences Toward Leniency under Mandatory Criminal Sentencing Guidelines: Role-in-the-Offense Adjustments for Federal Drug Trafficking Defendants
  10. The Effect of Kinship Placement Laws on Foster Children’s Well-Being
  11. Are Immigrants in Favour of Immigration? Evidence from England and Wales
  12. Competition, Product Innovation and Licensing
  13. The Impact of Educational Mismatches on Wages: The Influence of Measurement Error and Unobserved Heterogeneity
  14. Education Outcomes of Children of Asian Intermarriages: Does Gender of the Immigrant Parent Matter?
  15. Letters
  16. Endogenous Leadership in Tax Competition: A Combination of the Effects of Market Power and Strategic Interaction
  17. Can Catastrophic Long-Term Care Insurance Policies Increase Private Insurance Coverage and Reduce Medicaid Expenditure?
  18. Getting Girls to Schools! – Assessing the Impacts of a Targeted Program on Enrollment and Academic Performance
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