The Impacts of Rural Property Rights on Urban Unemployment, Wage Inequality, and Welfare in Developing Countries

Abstract

Abstract This paper establishes a three-sector general equilibrium model to explore how rural property rights influence urban unemployment, skilled-unskilled wage inequality and social welfare in developing countries. Strengthened rural property rights generate the rent-gaining effect and the productivity-enhancing effect, and the interaction of these two effects determines the changes of urban unemployment, skilled-unskilled wage inequality and social welfare. In addition to the aforementioned two effects, the agricultural sector’s wage elasticity of unskilled labor demand also matters for the change of wage inequality.