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Rising Wages: Has China Lost Its Global Labor Advantage?

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  • Yang, Dennis T.

    ()
    (University of Virginia)

  • Chen, Vivian

    ()
    (The Conference Board)

  • Monarch, Ryan

    ()
    (University of Michigan)

Abstract

We document dramatic rising wages in China for the period 1978-2007 based on multiple sources of aggregate statistics. Although real wages increased seven-fold during the period, growth was uneven across ownership types, industries and regions. Since the late 1990s, the wages of state-owned enterprises have increased rapidly and wage disparities between skill-intensive and labor-intensive industries have widened. Comparisons of international data show that China's manufacturing wage has already converged to that of Asian emerging markets, but China still enjoys enormous labor cost advantages over its neighboring developed economies. Our analysis suggests that China's wage growth will stabilize to a moderate pace in the near future.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5008.

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Length: 46 pages
Date of creation: Jun 2010
Date of revision:
Publication status: published in: Pacific Economic Review, 2010, 15(4), 482-504
Handle: RePEc:iza:izadps:dp5008

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Keywords: China; aggregate statistics; wage growth; international comparison;

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References

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  1. Meng,Xin, 2009. "Labour Market Reform in China," Cambridge Books, Cambridge University Press, number 9780521121118, October.
  2. Wan, Guanghua & Lu, Ming & Chen, Zhao, 2006. "Globalization and Regional Income Inequality: Empirical evidence from within China," Working Paper Series RP2006/139, World Institute for Development Economic Research (UNU-WIDER).
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  4. Yang, Dennis Tao, 2005. "Determinants of schooling returns during transition: Evidence from Chinese cities," Journal of Comparative Economics, Elsevier, vol. 33(2), pages 244-264, June.
  5. Fleisher, Belton M. & Peter, Klara Sabirianova & Wang, Xiaojun, 2004. "Returns to Skills and the Speed of Reforms: Evidence from Central and Eastern Europe, China, and Russia," IZA Discussion Papers 1182, Institute for the Study of Labor (IZA).
  6. John Giles & Albert Park & Fang Cai, 2003. "How has Economic Restructuring Affected China’s Urban Workers?," William Davidson Institute Working Papers Series 2003-628, William Davidson Institute at the University of Michigan.
  7. Richard B. Freeman & Remco Oostendorp, 2000. "Wages Around the World: Pay Across Occupations and Countries," NBER Working Papers 8058, National Bureau of Economic Research, Inc.
  8. Yang, Dennis Tao, 2002. "What has caused regional inequality in China?," China Economic Review, Elsevier, vol. 13(4), pages 331-334, December.
  9. John Knight & Jinjun Xue, 2006. "How High is Urban Unemployment in China?," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 4(2), pages 91-107.
  10. Haiyan Deng & Robert H. McGuckin & John C. Haltiwanger & Xu Jianyi & Liu Yaodong & Liu Yuqi, 2007. "The Contribution of Restructuring and Reallocation to China's Productivity and Growth," Economics Program Working Papers 07-04, The Conference Board, Economics Program.
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  13. Ravi Kanbur & Xiaobo Zhang, 2004. "Fifty Years of Regional Inequality in China: A Journey Through Central Planning, Reform and Openness," Working Papers 158, Institute for Social and Economic Change, Bangalore.
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Citations

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Cited by:
  1. Gary Fields, 2012. "Challenges and policy lessons for the growth-employment-poverty nexus in developing countries," IZA Journal of Labor Policy, Springer, vol. 1(1), pages 1-24, December.
  2. Kang, Lili & Peng, Fei, 2011. "A selection analysis on education returns in China," MPRA Paper 38704, University Library of Munich, Germany.
  3. Dennis Tao Yang & Junsen Zhang & Shaojie Zhou, 2010. "Why are Saving Rates so High in China?," Working Papers 312010, Hong Kong Institute for Monetary Research.
  4. Dong He & Wenlang Zhang & Gaofeng Han & Tommy Wu, 2012. "Productivity Growth of the Non-Tradable Sectors in China," Working Papers 082012, Hong Kong Institute for Monetary Research.
  5. Mayer, Jörg, 2012. "Global rebalancing: Effects on trade and employment," Journal of Asian Economics, Elsevier, vol. 23(6), pages 627-642.
  6. Kang, Lili & Peng, Fei, 2013. "Economic Reform and Productivity Convergence in China," MPRA Paper 50810, University Library of Munich, Germany.
  7. Ramkishen S. Rajan & Javier Beverinotti, . "The Real Exchange Rate, Sectoral Allocation and Development in China and East Asia: A Simple Exposition," MPDD Working Paper Series WP/10/09, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
  8. Carsten A Holz & Aaron Mehrotra, 2013. "Wage and price dynamics in a large emerging economy: The case of China," BIS Working Papers 409, Bank for International Settlements.
  9. Janet Ceglowski & Stephen Golub, 2011. "Does China Still Have a Labor Cost Advantage?," CESifo Working Paper Series 3579, CESifo Group Munich.
  10. Wang, Le, 2011. "How Does Education Affect the Earnings Distribution in Urban China?," IZA Discussion Papers 6173, Institute for the Study of Labor (IZA).
  11. Fariha Kamal & Mary E. Lovely & Devashish Mitra, 2014. "Trade Liberalization And Labor Shares In China," Working Papers 14-24, Center for Economic Studies, U.S. Census Bureau.

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