Labor Migration and Urban-Rural Income Disparity

Abstract

The large income gap between urban and rural residents is a very serious problem in China. According to the official household income survey data, the rural-urban income gap has been widening continually since the mid-1980s although the gap declined slightly to 3.23 times in 2010. In 2009, the gap reached 3.33 times,¹ the highest figure so far. There is even a study that states that China’s rural-urban income gap is the largest in the world if we count the welfare benefits of urban residents (Li and Yue, 2005). However, some studies claim that the gap is overstated because China’s official household survey system excludes rural-to-urban migrants, which causes problems of overestimation of urban residents’ income and underestimation of rural residents’ income (Cai and Wang, 2009).