ABSTRACT
Two important related classical phenomena in most developing economies are the following: the coexistence of a high urban wage and a low rural wage in rural areas; and the coexistence of urban unemployment and the continuation of rural-urban migration. A sample survey conducted in seven counties in Henan province shows that the number of rural-urban migrants is positively correlated to per-capita grain production; that is, the more grain production, and the more rural-urban migration. In order to reduce the dependency on the unstable free market for food consumption, rural households with township village enterprises (TVE) employees may want to keep their cropland as insurance. However, the land may become a burden for out-migration. The income of a rural-rural migrant is the marginal product of his/her labour on rented land. Moreover, this agricultural income is real, as opposed to the city wage which is nominal.
