Determining the equilibrium effects of minimum wage changes on labor market outcomes is achallenging modeling and estimation problem; arriving at policy recommendations is a task even more daunting. Faced with the inherent difficulties of modeling equilibrium labor market events given the limited amount of data to which researchers have access, much recent research has been performed outside of an explicit behavioral framework, with researchers pursuing the more limited objective of carefully describing the observed effects of recent minimum wage changes using quasi-experimental methods [see Card and Krueger (1995) fora summary of these studies anda comprehensive, critical survey of most of the previous research done in this area].
China has had 15 years of unprecedented economic growth, which, to a significant extent, is related to a large scale movement of surplus labour from the low productivity rural sector to the high productivity urban sector.
Rural-urban migration provided Chinese industries with abandoned cheap labour and facilitated the fast growth of labour intensive manufacturing exports. Those who are interested in the issue of the sustainability of Chinese economic growth would be eager to learn the extent to which rural-urban migration can continue to drive the fast pace of economic growth.
Economists have long recognized that investment-finance behavior can influence business cycles. For example, Minsky’s financial instability hypothesis proposes that debt dynamics contribute to macroeconomic instability (Minsky, 1980, 1986, 1992, 1995). The financial underpinnings of the recent recession has generated renewed attention to Minsky’s finance-driven endogenous business cycle model. In this paper, we focus on a related factor that has been little emphasized in most Minskyan models: the role of household debt.
