Abstract By constructing a three-sector dynamic general equilibrium model that incorporates non-homothetic preference and efficiency differences of industries, this paper analyzes the mechanism of labor migration across sectors. Then by introducing the distortion coefficient of labor market and the optimization index of industrial structure into the model, this paper analyzes the effects of labor market distortion on the rationalization of industrial structure. Furthermore, based on Tobit model and provincial panel data from 2006 to 2015, the paper estimates the distortion level of Chinese labor market within a decade. The result shows the decrease of distortion is significantly conducive to labor migration and the rationalization of industrial structure. The coefficient of labor market distortion in China as a whole in the past decade is about 0.78, which leads to an output loss of about 3%.
2019, Vol. 36 
