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VILLAGE MODELING: A CHINESE RECIPE FOR BLENDING GENERAL EQUILIBRIUM AND HOUSEHOLD MODELING

By Marijke H. Kuiper

Abstract

This study provides the first quantitative analysis of the impact of rural-urban migration on a Chinese village economy. Existing village models do not reflect findings of the household literature on the importance of market imperfections. Prevailing imperfections in factor markets in rural China, however, necessitate an analysis that takes into account the nonseparability of household production and consumption decisions. This study therefore develops a methodology for analyzing interactions among households in a village economy, that bridges the current gap between household and village models. The resulting model is able to capture the impact of market imperfections on household decisions, as well as the impact of household decisions on other households in the village. Applying this model to a village in Jiangxi Province allows us to analyze the impact of rural-urban migration on households with and without access to migration.Community/Rural/Urban Development,

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