Cost Competitiveness Comparisons and Convergence in China
AbstractThis paper examines provincial disparities and convergence of sectors in China from a labour cost perspective. We find that the provinces in the Northeast and Coastal regions have strong advantages in the manufacturing sector, while the Primary sector, Construction and Real estate sectors have better cost competitiveness in the Interior and West regions. The decrease of relative unit labour cost (RULC) is mainly due to the faster growth rates of relative labour productivity (RLP) than the growth rate of relative nominal labour costs (RNLC) in most cases. A decomposition analysis shows that there are much more cost competitiveness gains, as well as relative decrease of nominal labour costs and labour productivity improvement during the period 1978-1995 than the years afterwards. We find the fast convergence of RULC is consistent with the fast converging RLP among provinces with static wages, suggesting the importance of institutional factors such as rigid wage setting in Chinese labour markets.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 42449.
Date of creation: 05 Nov 2012
Date of revision:
Unit Labour Cost; Regional Development Planning; China;
Other versions of this item:
- Lili Kang & Peng Fei, 2013. "Cost Competitiveness Comparisons and Convergence in China," National Institute Economic Review, National Institute of Economic and Social Research, vol. 223(1), pages R49-R60, February.
- R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy
- J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-17 (All new papers)
- NEP-EFF-2012-11-17 (Efficiency & Productivity)
- NEP-GEO-2012-11-17 (Economic Geography)
- NEP-TRA-2012-11-17 (Transition Economics)
- NEP-URE-2012-11-17 (Urban & Real Estate Economics)
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