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China has reached the lewis turning point

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  • Zhang, Xiaobo
  • Yang, Jin
  • Wang, Shenglin

Abstract

In the past several years, labor shortages in China have become an issue. However, there is heated debate as to whether China has passed the Lewis turning point and moved from a period of unlimited supply to a new era of labor shortage. Most empirical studies on this topic focus on estimation of total labor supply and demand. Yet the poor quality of China’s labor statistics leaves the debate open. In this paper, China’s position along the Lewis continuum is examined though primary surveys of wage rates, which offer a more reliable statistic than employment data. Our results show a clear rising trend in real wage rates since 2003. The acceleration of real wages even in slack seasons indicates that the era of surplus labor is over. This finding has important policy implications for China’s future development.

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Paper provided by International Food Policy Research Institute (IFPRI) in its series IFPRI discussion papers with number 977.

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Date of creation: 2010
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Handle: RePEc:fpr:ifprid:977

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Keywords: dual economy; employment data; Labor market; Lewis model; Supply and demand; surplus labor; wage rates;

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  1. Fan, Shenggen & Kanbur, Ravi & Zhang, Xiaobo, 2010. "China’s Regional Disparities: Experience and Policy," Working Papers 57041, Cornell University, Department of Applied Economics and Management.
  2. Kaushik Basu, 2003. "Analytical Development Economics: The Less Developed Economy Revisited," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262523442, December.
  3. John Knight, 2007. "China, South Africa and the Lewis Model," CSAE Working Paper Series 2007-12, Centre for the Study of African Economies, University of Oxford.
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Cited by:
  1. Binkai Chen & Ming Lu & Ninghua Zhong, 2012. "Hukou and Consumption Heterogeneity: Migrants' Expenditure Is Depressed by Institutional Constraints in Urban China," Global COE Hi-Stat Discussion Paper Series gd11-221, Institute of Economic Research, Hitotsubashi University.
  2. Nathalie Chusseau & Joël Hellier, 2012. "Inequality in Emerging Countries," Working Papers hal-00993411, HAL.
  3. Deininger, Klaus & Jin, Songqing & Xia, Fang & Huang, Jikun, 2014. "Moving Off the Farm: Land Institutions to Facilitate Structural Transformation and Agricultural Productivity Growth in China," World Development, Elsevier, vol. 59(C), pages 505-520.
  4. Anderson, Kym & Strutt, Anna, 2014. "Impacts of Asia’s Rise on African and Latin American Trade: Projections to 2030," 2014 Conference (58th), February 4-7, 2014, Port Maquarie, Australia 165805, Australian Agricultural and Resource Economics Society.
  5. Christiaensen, Luc & Heltberg, Rasmus, 2012. "Greening China's rural energy : new insights on the potential of smallholder biogas," Policy Research Working Paper Series 6102, The World Bank.
  6. Muto, Ichiro & Fukumoto, Tomoyuki, 2011. "Rebalancing China’s economic growth: some insights from Japan’s experience," MPRA Paper 32570, University Library of Munich, Germany.
  7. Qin, Yu & Zhang, Xiaobo, 2012. "Road to Specialization in Agricultural Production: Evidence from Rural China," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126455, International Association of Agricultural Economists.
  8. Fan, Shenggen & Kanbur, Ravi & Wei, Shang-Jin & Zhang, Xiaobo, 2014. "The Economics of China: Successes and Challenges," Working Papers 180153, Cornell University, Department of Applied Economics and Management.
  9. Bonatti, Luigi & Fracasso, Andrea, 2013. "Regime switches in the Sino-American co-dependency: Growth and structural change in China," Structural Change and Economic Dynamics, Elsevier, vol. 25(C), pages 1-32.
  10. Kym Anderson & Anna Strutt, 2014. "Food security policy options for China: lessons from other countries," Departmental Working Papers 2014-11, The Australian National University, Arndt-Corden Department of Economics.
  11. Loyalka, Prashant & Liu, Chengfang & Song, Yingquan & Yi, Hongmei & Huang, Xiaoting & Wei, Jianguo & Zhang, Linxiu & Shi, Yaojiang & Chu, James & Rozelle, Scott, 2013. "Can information and counseling help students from poor rural areas go to high school? Evidence from China," Journal of Comparative Economics, Elsevier, vol. 41(4), pages 1012-1025.
  12. Andersson, Fredrik N.G. & Edgerton, David L. & Opper, Sonja, 2013. "A Matter of Time: Revisiting Growth Convergence in China," World Development, Elsevier, vol. 45(C), pages 239-251.
  13. Roberto Fanfani & Nica Claudia Calò, 2011. "Rural Areas and Agricultural Holdings in China: What Has Changed Within Ten Years from the 1996 to the 2006?," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, issue 4, December.
  14. Mayer, Jörg, 2012. "Global rebalancing: Effects on trade and employment," Journal of Asian Economics, Elsevier, vol. 23(6), pages 627-642.
  15. Jianqing, Ruan & Zhang, Xiaobo, 2010. "Do geese migrate domestically?: Evidence from the Chinese textile and apparel industry," IFPRI discussion papers 1040, International Food Policy Research Institute (IFPRI).
  16. Qin, Yu & Zhang, Xiaobo, 2012. "The road to specialization in agricultural production:: Evidence from rural China," IFPRI discussion papers 1221, International Food Policy Research Institute (IFPRI).
  17. Fan, Shenggen & Brzeska, Joanna & Keyzer, Michiel & Halsema, Alex, 2013. "From subsistence to profit: Transforming smallholder farms," Food policy reports 26, International Food Policy Research Institute (IFPRI).

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