College of Economic and Management, South China Agricultural University
Major Project of National Social Science Foundation of China (23&ZD112).
Releasing the potential of returning labor force talent is a key method for achieving balanced growth in rural family incomes. Based on a data drawn from the China Labor-force Dynamic Survey (CLDS) and applying the theory of relative deprivation, this paper analyzed the impacts of labor force returning on rural income inequality by the OLS model and explored the affecting mechanisms through which investments in human and social capital this relationship. Results show that households with returning labor force members, comprising 21.7% of the sample, with an income increase of 3.62 thousand yuan and a reduction in income inequality by 0.09 units. The return of the labor force alleviates income inequality mainly by boosting investment in human and social capital at the household level. Further analysis reveals that this effect is more pronounced in reducing wage and property income inequality, especially in lower-income, farming, and working-type rural families. Therefore, to improve the human and social capital of rural households, this paper suggests enhancing the promotion and financial support for policies encouraging talent return and establishing comprehensive service platforms for training.