Over the past three decades India and China have experienced rapid economic growth along with structural transformation. Underneath the overall similarity however was one significant difference: rural-urban wage gaps declined in India, but widened in China. In both countries, the majority of these wage dynamics are left unexplained by worker attributes. We formalize a two- sector-two-location model in which structural transformation and urbanization respond endoge- nously to productivity shocks. While the structural transformation effect widens the urban-rural wage gap, the urbanization e¤ect reduces it, allowing the model to account for wage convergence in India and wage divergence in China.