Off-farm jobs and on-farm work in periods of boom and bust in rural China

Our overall goal is to help increase our understanding of labor supply on labor supply decisions in China during times of recession. This paper describes labor shifts in response to China's cycles of boom and bust and explores the farmer's decision to enter or exit the off-farm labor force. Using our own household data set, we present evidence that the agricultural sector has played an important stability-increasing role in the nation's development in the reform era. When layoffs increased and hiring slowed in the early 1990's, those who lost their jobs returned to the agricultural sector. Increased labor use in agriculture has reduced the income fluctuations that would have occured if there had been no on-farm work available. (C) 2001 Academic Press.