Labour Surplus Economy Under Transitions

Labour surplus economy as a concept is considered as a theory analyzing an economy, featuring in mainly a great number of rural labour force in excess of its capacity under a certain level of development and the reallocation process of the so-called "surplus" labour force within its economic dualism (rural-urban). And the economic development model is often defined in terms of the transfer of a large proportion of workers from agricultural to industrial activities according to Fei and Ranis. Along with three decades of economic reform in China, under the context of rapid improvement of industrialization and radical expansion of urbanization, labour mobility experienced from a restrict control to a gradual loosening, presented an unprecedented mass transfer globally. Studies from UNESCO released that migrant workers contributed 16 percent of its GDP growth over the past 20 years.

However, such a development model is highly questioned by the persistent fermentation of the wide-spread labour shortage, plus gradual and diminishing of the demographic dividend, as well as the current growing labour costs. A balanced & developmental idea, based on the transfer neither in the way to create high urban unemployment nor in the way of keeping rural labour force underemployment or indifference in the unproductive activities, initiated a heterodoxy model - "Tripartite Labour Supply Model", spurned the traditional dualism of labour market by trichotomy. The innovative idea as to separate the labour market into triple divisions (agricultural producer, floating migrants and urban labour markets), together with 35 years database both from the theoretical and practical perspectives demonstrated an alternative interpretation over the so-called “Lewis Turning Point”, released the profound reasons behind the increasing wages of migrant workers, as well as the possible solutions to the developmental bottleneck based on the labour surplus economy.