Why is full employment in a country not full employment of the country's labor force

A review of the definition of surplus labor in China and abroad

"Zero-value marginal labor productivity". The first to put forward the concept of "marginal labor productivity of zero or negative labor for surplus labor" is the famous American (classical school) development economist Arthur Lewis. 1954 Lewis published a paper entitled "economic development under conditions of unlimited supply of labor" in the British "Manchester Journal". In the paper, Lewis pointed out that the economic development of developing countries can be regarded as an unbalanced process in spatial distribution. As far as the economic structure of developing countries in general is concerned, there exists a "dual economic structure", that is, a capitalist sector represented by modern urban industries seeking profits and a so-called non-capitalist sector represented by the traditional subsistence agricultural sector in the countryside, which aims only at subsistence rather than profit-seeking. This dualistic economic structure is characterized by the fact that economic development depends on the capital multiplication and expansion of the modern capitalist sector with the possibility of continuous absorption of labor from the traditional non-capitalist agricultural sector, while traditional agriculture is extremely abundant in labor in this sector due to technological stagnation, the limitations of land expansion, and, in particular, the rapid growth of the rural population and the scarcity of capital inputs, thus creating a "In countries where the population is so large in relation to capital and natural resources that the marginal productivity of labor is small or equal to zero, or even negative, in the larger sectors of this (dualistic) economy, the supply of labor is unlimited. Some authors have noted the existence of such 'hidden' unemployment in the agricultural sector, and have said that in all cases household landholdings are so small that if some members of the household find other employment, the remaining members can still cultivate the land they own." (A. Lewis, 1989,3) A. Lewis goes on to state, "But whether or not marginal (labor) productivity is zero or small is immaterial to our analysis. In these economies, the price of labor is the minimum wage just enough to sustain life. Thus, the supply of labor is infinite as long as labor at this price is supplied in excess of demand." (A. Lewis, 1989,4). According to Lewis, the marginal productivity of the modern urban industrial sector is higher than that of the traditional rural agricultural sector, there is a large gap between the wages of workers in the two sectors, and the urban industrial sector creates more employment opportunities due to its continuous expansion, and under the premise of free movement of labor between rural and urban areas (i.e., no institutional barriers), the transfer of surplus labor from traditional agriculture to the urban industrial sector occurs. The transfer of surplus labor from traditional agriculture to the urban industrial sector occurs, but because of the nearly unlimited supply of traditional agricultural labor and the existence of unemployment in the urban industrial sector, the absorption of labor is limited, so the wage level of workers in the modern industrial sector can only be slightly higher than the subsistence level of income of workers in the agricultural sector. "The capitalist sector expands as a result of the reinvestment of surplus in the creation of new capital and absorbs more people from the subsistence sector to employment in the capitalist sector. The surplus grows larger and larger, capital formation grows larger and larger, and this process is maintained until the surplus labor disappears" (A. Lewis, 1989,12). This is the classic definition of surplus labor within the framework of A. Lewis' theory of "dual economic structure", in which the labor force with zero or even negative marginal productivity is surplus labor.

Our evaluation of this concept of western scholars is: first, their theoretical generalization of the existence of dual economic structure in developing countries is undoubtedly in line with the objective facts, and therefore correct, that is to say, the dual economic structure is the basis for the generation of agricultural surplus labor in developing countries. Secondly, the concept of surplus labor of "zero-value marginal productivity" utilizes the marginal analysis method of western economics to describe the surplus labor and its causes in developing countries from the dynamic perspective of incremental changes, which provides a successful example of macro-structural analysis of development economics, which is undoubtedly an important theoretical contribution of A. Lewis and others. Thirdly, however, the definition of agricultural surplus labor by A. Lewis et al. in terms of zero-valued marginal labor productivity is also flawed, mainly because, firstly, this definition is based on the premise of traditional agriculture with a long period of technological stagnation and other factors of production (land, capital, etc.) remain unchanged, while the vast majority of developing countries in the contemporary era are at different stages of the transition from traditional to modern agriculture, which is far from being the typical traditional model. Completely disregarding factors such as agricultural technological progress and human capital inputs and contributions during the agricultural transition period is clearly inconsistent with the facts. Secondly, a fatal flaw of using zero-value marginal productivity to define the existence of agricultural surplus labor is that it treats agriculture and modern industry as homogeneous industries, ignoring the fact that agriculture is a kind of risky and weak industry widely dependent on external natural conditions (such as ecological environment, climate, etc.). Compared with the relatively fixed external environment of industrial production, agricultural production depends not only on changes in land, labor, and capital inputs, but also to a large extent on the strengths and weaknesses of natural conditions and changes. For example, the output of the same amount of factor inputs in a disaster year is not only much lower than that in a favorable year, but also may not be able to produce any harvest. Therefore, it is questionable whether it is valid to determine the existence of surplus labor in agriculture on the basis of a zero or negative marginal productivity decline in a disaster year.

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The "change in land-labor ratio" statement. Aiming at A. Lewis and others "zero value marginal labor rate" definition is not consistent with the fact that the majority of developing countries in the agricultural development of the shortcomings of Chinese scholars Guo Xibao, Song Linfei and others to put forward a new definition of the standard. Guo Xibao's criterion is that "when a country (or region) has a long-term declining trend in the area of cultivated land per agricultural worker, we believe that there is agricultural surplus labor (force) in that country (or region)" (Guo Xibao, 1995). (Guo Xibao, 1995). In his explanation of this new definition, Guo Xibao emphasizes that there is a difference between the change in the average area of cultivated land by labor force and the change in the average area of cultivated land by regional population, i.e., a decline in the average area of cultivated land by labor force does not necessarily imply a decline in the average area of cultivated land per capita. He pointed out that this new definition emphasizes the long-term trend rather than the short-term fluctuation of the change in the average cultivated land by labor, and that if the average cultivated land by labor in a country or a region has been declining for several decades, there is a surplus of agricultural labor. The main reasons for this are: ① In a society with stagnant agricultural technology, the increase in the agricultural labor force leads to a decline in the marginal productivity of agricultural labor, even to zero. In this case, agricultural surplus labor is sure to exist, while agricultural workers per capita acreage is declining; ② in the agricultural technological progress of the society, the increase in agricultural workers may not reduce the marginal productivity of labor, but rather increase labor productivity and total output, because technological progress has increased the productivity of the land. But as long as the number of agricultural laborers increases more rapidly than the area of cultivated land, so that the area of working cultivated land declines, surplus agricultural labor remains. (This is due to the fact that the decline in the area of cultivated land occupied by each laborer inhibits, in general, the full realization of the potential for technological progress in agriculture, especially in machinery, the efficiency of scale operations, and the growth of labor productivity.) Hypothetically, if some laborers were withdrawn from the land, these potentials would be fully realized, making the remaining agricultural laborers more productive, and thus agricultural production would grow faster rather than decline. According to Guo Xibao, the long-term time series of the number of agricultural workers and the area of cultivated land makes it easier and simpler to identify the existence of agricultural surplus labor in a country or region than other definitions of surplus labor. (Guo Xibao, 1995)

We believe that Guo Xibao's empirical observation-based definition of surplus labor in terms of the long-term downward trend in land-labor changes is valuable and consistent with the empirical facts in China and many other developing countries. However, there are some questionable points in his definition, which are: first, if we start from the basic point of the change of marginal labor productivity in agriculture, the decline of arable land area per laborer is only a necessary but not a sufficient condition for the existence of surplus labor, because first of all, it safely excludes the other factors of agricultural production (e.g., capital) as well as the endogenous variables such as the technological progress and the natural conditions, and thus lacks the basis of the quantitative analysis for determining the existence of surplus labor and its quantity. There is a great deal of arbitrariness in determining the existence and quantity of surplus labor. Especially for countries with great differences in natural endowments such as land resources (e.g., the United States and China, Japan, etc.), it is difficult to use a uniform scale to determine the existence of surplus labor and its size, Mr. Guo, in arguing for the correctness of his new definition, also used the United States and Japan during the period of 1880-1980, the land-labor ratio of the rise of the example of the United States, Japan, in the agricultural development of the absence of surplus labor. The conclusion of surplus labor, he pointed out that the per capita arable land of agricultural laborers in the United States increased from 11.68 hectares in 1880 to 105.58 hectares in 1980, an increase of 8.13 times, and the average arable land of laborers in Japan increased from 0.3 hectares to 0.78 hectares, an increase of 1.6 times, during the same period. (Guo Xibao, 1995). In addition, the average cultivated land per laborer in Korea and Taiwan Province of China increased from 0.32 hectares and 0.53 hectares to 0.62 hectares and 0.72 hectares from 1953 to 1988, respectively. So he thinks that there is no surplus labor in Korea and Taiwan Province either. In fact, Mr. Kuo has forgotten that the period of time during which the long-term trend of the rise in the area of arable land per laborer occurred in the United States, Japan, South Korea, and Taiwan Province is precisely the process of the continuous existence of surplus labor in these countries or regions and the continuous transfer of such surplus labor. How can it be said that surplus labor does not exist? According to the data provided in Table 6-3 of Kuo's book "Theory of Agricultural Development" (Kuo, 1995), the employed agricultural labor force in South Korea and Taiwan Province of China was 5,997,000 and 1,647,000 respectively in 1953, and then dropped to 3,475,000 and 1,238,000 in 1988, a reduction of 2,520,000 and 400,000 people respectively, and this reduced labor force is not the "existing" labor force. These reduced labor force is not the "existence" of the surplus labor force and what is it? If the agricultural labor force continued to decline after 1988, and thus the land-labor ratio continued to rise, is this also evidence and justification for the non-existence of surplus agricultural labor? From this, according to Mr. Guo's new definition to determine the existence or otherwise of agricultural surplus labor, obviously difficult to justify.

Song Linfei's research on rural labor surplus in Nantong, Jiangsu Province, in 1982, put forward a formula for measuring agricultural surplus labor: G=(A-F)/A, in which G is the surplus, indicating the degree of agricultural labor surplus, A is the total labor force of the agricultural sector, and F is the labor force required for farmland cultivation, in which F=total cultivated land/x mu/labor force, and "x mu/labor force" is the total amount of cultivated land/x mu. "x acres/labor force" denotes the area of land that each labor force can cultivate throughout the year. Determining x involves two parameters: (1) the number of labor days required per mu (denoted by D); and (2) the number of labor days each laborer can perform throughout the year (denoted by L) then X = L/D. Song used this formula to measure the surplus of agricultural labor in Nantong County, Jiangsu Province, to be 56.8%. (Song Linfei, 1996). Song Linfei's method of determining whether or not surplus agricultural labor exists is the same as Guo Xibao's, i.e., the average cultivated area is used as a yardstick to determine the existence of surplus labor. The difference is that Song's determination method is static rather than dynamic in trend, and adds two variables to the area of arable land burdened by each laborer: the number of hours per day per unit of labor to cultivate a unit of arable land, and the number of working days per unit of labor that can be accomplished per year. Song Linfei's definition and method of measurement take full account of the existence of seasonal differences in agricultural labor time, which is very much in line with the reality of agricultural production. This is consistent with the idea of determining surplus labor by the rise and fall of (agricultural) labor hours and the marginal productivity of labor hours, which is widely used in contemporary Western economics. In this respect Song's definition and measurements are a step further than Guo's, and more operational in terms of quantitative analysis. However, we believe that Song Linfei's definition of surplus labor and its measurement formula still fail to take into account the effects of changes in agricultural factor inputs and agricultural technological progress on the burden of arable land per unit of labor.

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In addition, the setting of the limit of the annual amount of high working hours per unit of labor force does not fully take into account the huge differences in the economic, social, and cultural customs of different regions, especially in different regions due to the differences in topography, climate, soil, water, light and heat and other resources, the difference in working hours per unit of arable land is even greater. In particular, due to the differences in terrain, climate, soil, water, heat and other resource conditions in different regions, the difference in labor hours per unit of arable land is even greater. In addition, technological advances in agriculture (e.g., the spread of no-tillage, industrialized breeding, etc.) and capital inputs (the use of agricultural machinery, drainage and irrigation equipment) have always affected the changes in the area of arable land that can be afforded by each agricultural laborer. Therefore, Song's definition and its measurement model may be valuable for the measurement of agricultural surplus labor in a homogeneous small region at a certain point; in other words, this definitional model can hardly be a concept with general economic significance.

Lastly, it should be pointed out that, based on the land-labor ratio, both Guo's and Song's definitions of surplus labor focus on the cultivation industry in agriculture, but in fact, the existence of surplus labor in other industries of large-scale agriculture, such as forestry, aquaculture, animal husbandry, fishery, and household by-products, cannot be measured in terms of the area of cultivated land afforded by each agricultural laborer and its changes. This is also one of the major limitations of Guo Xibao and Song Linfei's method of determining the change in the land-labor ratio.

International Standard Comparison Method - H. Chinnery's "Development Model": In 1975, H. Chinnery, a famous western economist, constructed the "World Development Model", in which H. Chinnery used the Kuznets' statistical inductive method to analyze the development of 101 countries in the world. H. Chinnery used the Kutznets statistical method to analyze the regression of social statistics indicators (27 variables) of 101 countries in the world from 1950 to 1970, and came up with a regression model with GNP per capita as the dependent variable (Y) and other 27 social and economic development indicators as independent variables (X[,n]) - the "World Development Model". "World Development Model". Based on this regression model, H. Chinnery classified the "standard structure" scale with 9 levels of GNP per capita from less than 100 to more than 1,000 dollars. According to this scale, the standard values of 27 socio-economic indicators corresponding to different levels can be determined. Each country or region can then compare its own reality with this "standard structure" to find out its development gap. From H. Chenery's "standard structure" model, we can find that under the level of per capita GNP=800 dollars, the labor force of primary industry (which is called primary industry in the model) is 30% of the total labor force, and when the level of per capita GNP=1000 dollars, the proportion of labor force in the primary industry drops to 25.2% ( H. Chenney, M. Sycquin, 1975, 38). Song Linfei, based on Chenery's "standard model" of China's agricultural labor surplus rate of 16%, and after correcting for the overestimation of China's price distortions in Chenery's model with the Kutznets coefficient, calculated China's agricultural residual labor surplus rate (which he called the rate of irrational allocation) to be 13.8%, (Song Linfei, 1996). (Song Linfei, 1996). Based on the actual data of 1995, when China's per capita GNP rating was about 800 USD and the proportion of agricultural labor force in the total labor force was 52.2%, and comparing it with Qian's standard model, and similarly deducting the price distortion factor, the author measured the residual labor rate in that year to be 16.4%. If we calculate on the basis of the national total labor force of 689 million in 1995, the total amount of surplus agricultural labor in that year was 113 million. Compared with the official and domestic economists' estimation in the mid-1990s that China's surplus agricultural labor force was 130-150 million, there is obviously an underestimation bias in the figure measured by Qian's standard model. We think that H. Chinnery model provides a standard for each country to determine whether there is surplus agricultural labor and its quantity and proportion, which is a model with great value for comparative research, but its biggest defect is that it ignores the conditions of each country's national situation, which is very different from each other, in addition to the regression of each country's socio-economic indicators constitutes a kind of pure form, or what Max Weber called the "ideal model". In addition to the fact that the regression of socio-economic indicators constitutes a purely formal or what Max Weber called "ideal" model, it also ignores the influence of cultural and institutional factors in each country. For example, the agricultural labor force that stays in rural areas of China is unable to migrate and transfer mainly due to the artificial barriers of the urban-rural household registration system rather than due to economic reasons, which is very different from that of the majority of developing countries in the world. Therefore, it is difficult to draw conclusions about the usefulness of measuring surplus agricultural labor in China by applying the model of development trends and characteristics of most countries to China's rural and agricultural situation.

The new definition of China's rural surplus labor force

Based on the empirical facts about the utilization of labor force under the current economic system in rural China, we try to redefine the rural labor force surplus and its related concepts as follows:

1. Rural labor force: refers to the individual males and females between the ages of 15-64 years of age of the population whose household registration is in a rural community, but excludes among them school students, military service personnel, and those who are unable to work due to physical reasons, etc.

2. Rural surplus labor force: refers to the underemployed labor force in rural China; the so-called underemployment of labor force refers to the number of effective working hours of each unit of rural labor force per year (Note: working hours in this model refers to all economic activities of the rural labor force engaged in agriculture (including cultivation, forestry, animal husbandry, by-products, and fishery) and non-agriculture (such as industry, handicrafts, commerce, construction, transportation, education, culture, and so on), as well as all economic activities of the rural labor force. The number of effective hours (in hours) spent by the rural labor force on all economic activities in agriculture (including cultivation, forestry, animal husbandry and fishery) and non-agriculture (such as industry, handicrafts, commerce, construction, transportation, education, culture, etc.). However, it does not include the hours consumed in activities other than economic activities, such as cooking, laundry, dining, recreation, leisure, etc.). A state of being below the recognized standard of annual effective hours of work per unit of fully employed rural labor, i.e., the number of hours worked in the system.

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3. Agricultural surplus labor force: refers to the rural underemployed labor force engaged in agriculture (including planting, breeding, forestry, animal husbandry and fisheries).

Through the definition of the above three concepts, we actually emphasize its two important implications: First, the core and essence of the rural and agricultural labor surplus is the underutilization of the labor force, i.e., underemployment. Secondly, according to an internationally and nationally acceptable standard, the number of effective working hours of the rural labor force can be used as a criterion for determining whether or not the labor force is surplus, as well as for defining the extent of the labor force surplus. In order to illustrate the rationality of underemployment as a defining criterion for labor surplus, we would like to briefly explain the connotation of this new definition and the conditions for its establishment.

First of all, we believe that there is an economic basis for measuring the adequacy or inadequacy of labor force employment in terms of labor time or working time. As early as the middle of the 19th century, Marxist political economy's dissection of the nature of capitalism - the theory of surplus value - was based on the capitalist's gratuitous appropriation of the workers' surplus labor time, and, in fact, labor time (rather than money or other units of measurement) was the basic theoretical analysis conducted by Marx in his <>. unit of measurement. Marx believed that the amount of value of a commodity is determined by the amount of general labor expended in producing that commodity, while the amount of labor is calculated by the duration of labor, and labor time is used as a unit of measurement, such as hours, days, and so on. Contemporary some famous western economists in the face of complex economic problems that are difficult to measure in monetary units also widely used time (often in hours) as a unit of quantitative analysis. For example, the famous American economist (1992 Nobel Prize winner in economics) Gary Becker (Gary.S.Bec- ker) and his collaborators in the construction of the human capital accumulation model avoids the problem of price, and a person's childhood, adulthood education time, and a lifetime of work time and even innate endowment conditions through the unit of time to measure the accumulation of human capital. On the other hand, as mentioned above, the definition and measurement of agricultural surplus labor by the classical school of economics in terms of "zero-value marginal labor productivity" is flawed and controversial to a large extent due to the qualitative and quantitative differences of factor inputs in the production function of agriculture, as well as the uncertainty of the environmental conditions of agricultural production. There are several other definitions of agricultural surplus labor and corresponding measurement methods, such as the "method of variation in the arable land-labor ratio" (see Guo Xibao, 1995, 166-167, and Song Linfei, 1996, 105-106), the "international standard" (see Crispin, 1995), and the "comparative method" (see Crispin, 1995), and the "international standard" (see Crispin, 1996). Comparison method" (see Chennery, Msycquin, 1975, 38) and so on also have similar problems and controversies with the standard and method of "zero-value marginal labor productivity". Therefore, this study attempts to use labor time as the basic unit of measurement to define and measure China's rural and agricultural surplus labor force, which should be a more reasonable choice.

Secondly, it should also be emphasized that the use of working hours as a measure of surplus labor must be strictly limited by the existence of essential theoretical premises or assumptions in economics, which must be empirically verified as correct. We set several theoretical assumptions of economics as follows:

1. Economic rationality assumption. Farmers (i.e., rural laborers) are rational economic beings. Under China's current rural economic system, the purpose of all economic activities engaged in by peasants is to pursue the maximization of material interests, and avoiding harm and seeking profit is the essence of economic man of peasants.

2. The assumption of the validity of working hours. Under the current economic system in rural areas, the farmers who have the legal right to use the land and other factors of production have the right to dominate the domination and utilization of their labor time will be the most adequate and effective. Peasants will not be lazy during the labor time at their disposal.

3. Homogeneity assumption of effective working hours. According to the assumption of the effectiveness of working hours, the amount of labor in terms of effective working hours of rural labor can be regarded as undifferentiated and homogeneous labor consumption and used to calculate the degree of effectiveness of labor utilization.

4. The assumption of rational allocation of labor resources. Under the current economic system in rural China, farmers have the tendency to allocate their own labor resources and maximize the efficiency of labor utilization (Note: the so-called tendency refers to the subjective motivation of farmers to rationally allocate their own labor resources and maximize the efficiency of their utilization, regardless of the objective effect - the author's note.) . Therefore, the full employment of the labor force conditional on the search for the maximization of economic returns is the concretization of this tendency.

The main theoretical premise (or assumption) that guarantees the validity of this new definition of surplus labor is the validity of the laborer's working hours, i.e., the degree to which the rural labor force, when combined with other factors of production, is utilized to the fullest and most efficient extent possible under the locally established conditions of the time. The opposite of this assumption is that, under another institutional arrangement (e.g., the People's Commune system before the 1980s), the majority of rural laborers were in the "work without effort" and "five people do the work of three" style. The majority of the rural labor force is in the state of "work without effort", "three people's work, five people do", that is, the labor force unit working hours are not fully utilized and not the most effective state. Once the "effective working hours assumption" does not hold, the definition and related model we use to determine the surplus of rural labor will be "distorted". Therefore, in a certain sense, the definition of rural labor surplus in terms of underemployment, which mainly connotes insufficient effective working hours of the labor force, is only applicable to rural China in the period of economic transition since 1978.

References

①Working hours in this model refer to the effective hours (in hours) spent by the rural labor force on all economic activities in agriculture (including planting, forestry, animal husbandry, by-products, and fishery) and non-agriculture (e.g., industry, handicrafts, commerce and trade, construction, transportation, education, and cultural undertakings, etc.). However, it does not include the hours consumed by activities other than economic activities, such as cooking, laundry, dining, recreation, leisure and so on.

②The so-called tendency refers to the subjective motivation possessed by farmers to rationally allocate their own labor resources and maximize the efficiency of their utilization, without regard to their objective effects - author's note.

③Arthur B. Lewis. Lewis: Dualistic Economic Theory, Chinese translation, Beijing Economics Institute Press, 1989 edition.

④ Guo Xibao: "Theory of Agricultural Development", Wuhan University Press, 1995 edition.

⑤Song Linfei: "The Transfer of China's Rural Labor Force and Countermeasures", Sociological Research, No. 2, 1996.

6 H. Chennery, M. Sycquin, Patterns of Development, 1950-1970, Oxford University press, 1975.

7 Gary. Belk et al (Human Capital, Fertility and Economic Growth, Journal of Political Economy, Volume 98, 1990.

8 Robert B. Lucas, On the Mechanisms of Economic Development. Lucas: "On the mechanism of economic development", Journal of Monetary Economics, Vol. 22, 1980.

9 Fei Jinghan, G. Lanis, "the development of the labor surplus economy" in Chinese translation, Huaxia Publishing House, 1989 edition.

⑩S.加塔克，K.英格森特《农业与经济发展》中译本，华夏出版社，1987年版。

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