DP16614 “Involution” or Seasonality: a New Perspective on the 19-20th Century Chinese Agricultural Development
China’s (or East Asian) highly crop-based agriculture generates high seasonality in demand for labor across the year, leading to the rise of agricultural and handicraft side-employment. In contrast to the “involution” thesis which posits a Malthusian trap with diminishing return in Chinese agriculture dictated by deteriorating land-labor ratio, this paper presents stylized empirical facts from 19-20th century Chinese (and Japanese) agriculture and theoretical models to demonstrate that this labor relocation across the seasons contributes to a Boserupian type of growth. It leads to rising commercialization and population density, but not necessarily urbanization, rising productivity and structural change. Ultimately, industrialization and the expansion of markets that occurred outside agriculture pulled China (and Japan) out of the “involution” to embark on modernization.