ABSTRACT
Employment and labor policies must be mutually consistent with the specific economic system of any given country. Planned-economy countries generally reject market mechanisms as a way to allocate labor. Instead, they incorporate labor into the scope of the centrally planned system. Developing countries generally use policy measures to segregate urban and rural factors of production in order to derive different kinds of resources from each economic sector. This is done either to enable industrialization or to safeguard a relatively higher standard of living in cities (Anderson, 1995; Knight and Song, 1999). Under its own planned-economy system, China was no exception. China had a long-standing situation in which rural areas were cut off from urban areas. The situation formed in response to the policy determination that gave priority to industrial development.
