The literature suggests that migrants’ remittances reduce wage inequality between skilled and unskilled labor, as external funds flow into rural areas and raise the wage rate of unskilled labor. However, despite significant rural–urban migration and substantial urban–rural remittances in China, the Gini coefficient has not shown a notable decline and remains persistently high. This chapter argues that existing studies overlook the role of small-scale agricultural modernization and rural–urban labor migration, which reallocate labor between rural and urban regions. To facilitate the adoption of modern intermediate inputs, small-scale agriculture requires an intermediate sector—the agricultural producer service sector.