TY  - JOUR
AB  - Purpose– Many countries have experienced, or are experiencing, urbanization. One such example is China. Even though the large‐scale rural‐urban migration seems chaotic on the surface, there are certain underlying forces driving individual decisions. The purpose of this paper is to provide some understanding of the relationship between human capital, migration, and occupational choices.Design/methodology/approach– The paper starts with an overlapping generations model. Human capital plays various roles across different occupations – it does not affect the income of farmers, it affects income of workers linearly, and it has increasing returns in rural non‐farm business. The paper then derives income profiles for individuals with heterogeneous human capital, and finds the human capital thresholds of occupations. The paper calibrates the model to China, and simulates the model to answer two questions: how does an improving human capital distribution affect rural wages, quantities of migrants and return migrants? How does a fast‐growing urban wage rate affect rural wages, quantities of migrants and return migrants?Findings– First, depending on the initial human capital level, policies aiming to enhance human capital may have different impacts on migration. If the initial human capital level is low, these policies will yield more permanent migrants; on the contrary, if the initial human capital is at a relatively high level, then a shrinking permanent migrant class with a growing entrepreneur class can be expected. This results in an inverted U‐shaped relation between the initial human capital level and the size of the permanent migrant class. Second, even though the non‐farm business of return migrants helps raise rural wages, the income inequality between rural and urban areas is not eliminated and migration is persistent. Third, borrowing constraints limit the size of rural non‐farm businesses and slow down the development of rural industry. The fourth and final point is that, migration costs discourage labor mobility and reduce the quantities of both permanent migrants and entrepreneurs.Originality/value– This is an original paper on this subject.
VL  - 4
IS  - 2
SN  - 1753-8254
DO  - 10.1108/17538251111172023
UR  - https://doi.org/10.1108/17538251111172023
AU  - Liu Jialu
PY  - 2011
Y1  - 2011/01/01
TI  - Human capital, migration and rural entrepreneurship in China
T2  - Indian Growth and Development Review
PB  - Emerald Group Publishing Limited
SP  - 100
EP  - 122
Y2  - 2024/04/20
ER  -