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The Supply and Demand Factors Behind the Relative Earnings Increases in Urban China at the Turn of the 21st Century

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  • Gao, Hang

    ()
    (University of Alberta, Department of Economics)

  • Marchand, Joseph

    ()
    (University of Alberta, Department of Economics)

  • Song, Tao

    ()
    (University of Alberta, Department of Economics)

Abstract

Real earnings have increased for all demographic and skill groups within China’s urban labor market from the mid-1990s to the early 2000s. This paper analyzes these changes in earnings with respect to the relative supply and demand changes of each of the imperfectly substitutable labor inputs. These movements are found to be consistent with real earnings increases for some of the input groups but are inconsistent for others. This implies that China has transitioned closer to a free labor market from its planned origin. In addition, labor supply is shown to be moving towards a more educated workforce, and firm privatization and international trade are found to play significant roles in determining the labor demand movements.

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Bibliographic Info

Paper provided by University of Alberta, Department of Economics in its series Working Papers with number 2011-23.

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Length: 48 pages
Date of creation: 01 Dec 2011
Date of revision: 01 Feb 2012
Handle: RePEc:ris:albaec:2011_023

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Keywords: China; earnings; labor demand; labor supply; transitional economies;

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  1. J. DavidBrown & JohnS. Earle & �lmos Telegdy, 2010. "Employment and Wage Effects of Privatisation: Evidence from Hungary, Romania, Russia and Ukraine," Economic Journal, Royal Economic Society, vol. 120(545), pages 683-708, 06.
  2. Bargain, Olivier & Bhaumik, Sumon K. & Chakrabarty, Manisha & Zhao, Zhong, 2008. "Earnings Differences between Chinese and Indian Wage Earners, 1987–2004," IZA Discussion Papers 3284, Institute for the Study of Labor (IZA).
  3. J. David Brown & John S. Earle & Almos Telegdy, 2006. "The Productivity Effects of Privatization: Longitudinal Estimates from Hungary, Romania, Russia, and Ukraine," Journal of Political Economy, University of Chicago Press, vol. 114(1), pages 61-99, February.
  4. Appleton, Simon & Song, Lina & Xia, Qingjie, 2005. "Has China crossed the river? The evolution of wage structure in urban China during reform and retrenchment," Journal of Comparative Economics, Elsevier, vol. 33(4), pages 644-663, December.
  5. Dong, Xiao-yuan & Xu, Lixin Colin, 2009. "Labor restructuring in China: Toward a functioning labor market," Journal of Comparative Economics, Elsevier, vol. 37(2), pages 287-305, June.
  6. Zhang, Junsen & Zhao, Yaohui & Park, Albert & Song, Xiaoqing, 2005. "Economic returns to schooling in urban China, 1988 to 2001," Journal of Comparative Economics, Elsevier, vol. 33(4), pages 730-752, December.
  7. Katz, L.F. & Murphy, K.M., 1991. "Changes in Relative Wages, 1963-1987: Supply and Demand Factors," Harvard Institute of Economic Research Working Papers 1580, Harvard - Institute of Economic Research.
  8. Lee, Young, 1999. "Wages and Employment in China's SOEs, 1980-1994: Corporatization, Market Development, and Insider Forces," Journal of Comparative Economics, Elsevier, vol. 27(4), pages 702-729, December.
  9. Li, Haizheng & Zax, Jeffrey S., 2003. "Labor supply in urban China," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 795-817, December.
  10. Lam, Kit-Chun & Liu, Pak-Wai, 2011. "Increasing dispersion of skills and rising earnings inequality," Journal of Comparative Economics, Elsevier, vol. 39(1), pages 82-91, March.
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Cited by:
  1. Dammert, Ana C. & Ural Marchand, Beyza & Wan, Chi, 2013. "Gender Wage-Productivity Differentials and Global Integration in China," IZA Discussion Papers 7159, Institute for the Study of Labor (IZA).
  2. Dammert, Ana C. & Ural Marchand, Beyza, 2013. "Privatization in China: Technology and Gender in the Manufacturing Sector," Working Papers 2013-12, University of Alberta, Department of Economics.

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