The declining share of agricultural employment in China: How fast?

Between 1962 and 2013, China’s agricultural employment share declined from 82% to 31%.The transfer of workers out of low-productivity agriculture is a fundamental pillar of China’saspirations to progress and eventually become a high-income economy. We hypothesizethat the drivers of this decline have been the increase in income per capita, industrial valueadded, foreign direct investment and domestic credit. We use an Autoregressive DistributedLag Model to test the strong exogeneity of the regressors. This is confirmed by the data andhence we use our model for forecasting. Results indicate that the share of employment inagriculture in China will decline to about 24% by 2020, the end of the 13th Five-Year Plan(2016–2020). We also estimate that China’s employment share will reach 5%, the shareobserved in today’s rich economies, by 2042–2048.©