ABSTRACT
This study investigates whether the concept of surplus labour adequately characterises the labour conditions facing rural Chinese households, and the implications of such a surplus for household labour allocation. Using household survey data from one county in north China, we first estimate the marginal products of labour in agricultural and non-agricultural activities; these are compared with the returns to labour in other activities. The marginal returns to agricultural labour are found to be a fraction of those to non-agricultural labour, consistent with the existence of surplus labour and constraints on labour mobility. Investigation of the variation in marginal returns across activities and households illustrates the importance of village characteristics and household endowments, including demographic composition and political connections, in determining a household's capacity to transfer labour out of agriculture.
