Regional disparity and economic growth in China - The impact of labor market distortions

The paper tries to analyze China's regional disparity in a framework of convergence in neoclassical theory of growth. We employ comparative productivity of agricultural labor as an index of labor market distortion to see the impact of difference of labor market maturity among regions on regional growth performance, controlling for a set of variables determining growth rate. The finding is that (1) there is an evidence of conditional convergence in China's growth, namely, per capita GDP in the initiative year is negatively related to growth rates in following years, (2) labor market distortion negatively impacts regional growth rates, and (3) many other variables used at previous studies impact growth performance, as is expected by neoclassical theory of growth. (C) 2002 Elsevier Science Inc. All rights reserved.