1. Creating the entrepreneur farmers needed yesterday, today and tomorrow Xiaobing Wang, Jikun Huang, Linxiu Zhang, Scott Rozelle Jan 25, 2011

2. Percent of Pop’n in Ag. Sector Income per Capita US and other OECD nations Ethiopia, Rwanda, etc. “ Iron Law of Economic Development” Data from the World Bank

3. Percent of Pop’n in Ag. Sector Income per Capita Development = Industrialization Modernization = Urbanization Zero : there are no high income countries in world with more than 10% of their populations that live in agriculture 10%

4. Percent of Pop’n in Ag. Sector Income per Capita “ Miracle Development—with Taiwanese Characteristics” Taiwan—1950s Taiwan—1974 Taiwan—today Taiwan—1987

10. China’s per capita GDP (at PPP) in the last one thousand years Tang Song Ming Ch’ing Since 1978 1911 – 1970s Source: Angus Maddison Poverty line

11. Becoming better off … income rising …

12. Shenzhen in 1980 … … and 2000

13. Transformation Path Percent of Pop’n in Ag. Sector Income per Capita So it is clear that as China is growing (moving left to right across the graph), it also is beginning to move “down” the transformation path … this is “development”

14. What was the Role of Self-employed (through 2000)? Self-employed Migrant Wage Earners

22. Sichuan Hubei Shaanxi Hebei Zhejiang Liaoning 2000 China National Land and Labor Survey (First Wave) -- 6 Provinces -- 5 Counties / Province -- 2 Villages / County -- 20 Households / Village  1200 hh’s

23. Sichuan Hubei Shaanxi Hebei Zhejiang Liaoning 2008 China National Land and Labor Survey ( Second Wave ) -- 6 Provinces -- 5 Counties / Province -- 2 Villages / County -- 20 Households / Village  1160 hh’s Two villages in one county were almost completely destroyed by the earthquake in Sichuan Surveyed: May 2009

25. In 2008: 62% of rural labor force had jobs off the farm  more than 80% of households had at least 1 person working off the farm In 1980: only 16% worked off the farm Overall Increase in Off-farm Work by Rural Laborers (note 100% is the full rural labor force ≈ 500 million people)

26. Cohort effect of off-farm participation

27. During 2000s, SE is stagnant and migrant wage earners keep growing fast Self-employed Migrant Wage Earners

28. Remember what happened through 2000? Self-employed Migrant Wage Earners

29. SE and Migrant Wage Earners, 1981 to 2008 Self-employed Migrant Wage Earners

30. Number of SE Firms Even more dynamic than this … 60% of firms “died” between 2000 and 2008 … 50% of firms are “new” (born between 2000 and 2008 …

31. Why did this happen? Why did this happen?

33. Wages and Returns to Self Employment, 2000 and 2008 Predicted wage for the Self Employed Returns to Self Employment

34. Income gap of being self-employer The income gap declines 2000 2008 Actual hourly earnings 7.2 7.4 Predicted wage 3.1 4.7 Difference 4.1 2.7

35. Probit estimation of rural laborer’s occupation choice, 2008 Variables If off-farm rural laborers are self-employed (Self-employer=1; Wage earner=0) Earning gap 0.010** 0.007* (2.22) (1.79) Gender -0.249** -0.187* (-2.53) (-1.80) Training 0.413*** 0.405*** (4.24) (3.86) Marriage 0.508*** 0.471*** (3.32) (2.93) Age 0.084*** 0.085** (2.69) (2.59) Age square -0.0008** -0.0008** (-2.23) (-2.15)