IDEAS home Printed from https://ideas.repec.org/a/bla/agecon/v45y2014i4p513-524.html
   My bibliography  Save this article

Toward a consumer economy in China: implications of changing wage policies for U.S. cotton exports

Author

Listed:
  • Stephen Macdonald
  • Suwen Pan
  • Darren Hudson
  • Francis Tuan

Abstract

The effect of a Chinese minimum wage increase on China's textile market as well as on the world cotton market is evaluated. Based on a Nonlinear Quadratic Almost Ideal Demand System (NQAIDS) model of China's textile demand, the results suggest that the income elasticity for textiles is around 0.6 in China, and that apparel is less price responsive than home textiles and other textile products. Simulation results suggest that a minimum wage increase would raise Chinese domestic textile consumption and lower Chinese textile exports. Most of the decline in textile exports by China is offset by expansion in other countries’ domestic textile production and results in a slight increase in world cotton mill utilization and higher clothing prices.

Suggested Citation

  • Stephen Macdonald & Suwen Pan & Darren Hudson & Francis Tuan, 2014. "Toward a consumer economy in China: implications of changing wage policies for U.S. cotton exports," Agricultural Economics, International Association of Agricultural Economists, vol. 45(4), pages 513-524, July.
    • Handle: RePEc:bla:agecon:v:45:y:2014:i:4:p:513-524
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1111/agec.12103
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Ahn, Tom & Arcidiacono, Peter & Wessels, Walter, 2011. "The Distributional Impacts of Minimum Wage Increases When Both Labor Supply and Labor Demand Are Endogenous," Journal of Business & Economic Statistics, American Statistical Association, vol. 29(1), pages 12-23.
    2. Drazen, Allan, 1986. "Optimal Minimum Wage Legislation," Economic Journal, Royal Economic Society, vol. 96(383), pages 774-784, September.
    3. Pofahl, Geoffrey M. & Capps, Oral, Jr. & Clauson, Annette L., 2005. "Demand for Non-Alcoholic Beverages: Evidence From The ACNielsen Home Scan Panel," 2005 Annual meeting, July 24-27, Providence, RI 19441, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Wyatt Thompson, 2004. "Using Elasticities from an Almost Ideal Demand System? Watch Out for Group Expenditure!," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(4), pages 1108-1116.
    5. Stephen MacDonald & Suwen Pan & Darren Hudson & Francis Tuan, 2013. "Chinese domestic textile demand: where they buy does matter," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 5(3), pages 312-327, August.
    6. Mr. Gian M Milesi-Ferretti & Mr. Olivier J Blanchard, 2009. "Global Imbalances: In Midstream?," IMF Staff Position Notes 2009/029, International Monetary Fund.
    7. Rebitzer, James B. & Taylor, Lowell J., 1995. "The consequences of minimum wage laws Some new theoretical ideas," Journal of Public Economics, Elsevier, vol. 56(2), pages 245-255, February.
    8. Duffy, Patricia A. & Wohlgenant, Michael K., 1991. "Effects of an Export Subsidy on the U.S. Cotton Industry," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 23(2), pages 1-8, December.
    9. Zhang, Ping & Fletcher, Stanley M. & Ethridge, Don E., 1994. "Interfiber Competition In Textile Mills Over Time," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 26(1), pages 1-10, July.
    10. Shangnan Shui & John C. Beghin & Michael Wohlgenant, 1993. "The Impact of Technical Change, Scale Effects, and Forward Ordering on U.S. Fiber Demands," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(3), pages 632-641.
    11. Adolf Buse, 1994. "Evaluating the Linearized Almost Ideal Demand System," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(4), pages 781-793.
    12. Kearl, J R, et al, 1979. "A Confusion of Economists?," American Economic Review, American Economic Association, vol. 69(2), pages 28-37, May.
    13. Gian M Milesi-Ferretti & Olivier J Blanchard, 2009. "Global Imbalances; In Midstream?," IMF Staff Position Notes 2009/29, International Monetary Fund.
    14. Monke, Eric A & Taylor, Lester D, 1985. "International Trade Constraints and Commodity Market Models: An Application to the Cotton Market," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 98-107, February.
    15. Zhang, Ping & Fletcher, Stanley M. & Ethridge, Don E., 1994. "Interfiber Competition in Textile Mills Over Time," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 26(1), pages 173-182, July.
    16. Richard Green & Julian M. Alston, 1990. "Elasticities in AIDS Models," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(2), pages 442-445.
    17. Stephen MacDonald & Suwen Pan & Darren Hudson & Francis Tuan, 2013. "Chinese domestic textile demand: where they buy does matter," China Agricultural Economic Review, Emerald Group Publishing, vol. 5(3), pages 312-327, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. MacDonald, Stephen, 2014. "China's Cotton Policy: New Directions in 2014," Agricultural Outlook Forum 2014 168616, United States Department of Agriculture, Agricultural Outlook Forum.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Malaga, Jaime E. & Pan, Suwen & Duch-Carvallo, Teresa, 2010. "Mexican Meat demand Parameters Before and After NAFTA: Evidence from Household Surveys 1992–2004," Journal of Food Distribution Research, Food Distribution Research Society, vol. 41(3), pages 1-9, November.
    2. Laura Giuliano, 2013. "Minimum Wage Effects on Employment, Substitution, and the Teenage Labor Supply: Evidence from Personnel Data," Journal of Labor Economics, University of Chicago Press, vol. 31(1), pages 155-194.
    3. Erwin Ooghe, 2015. "Wage policies, employment, and redistributive efficiency," Working Papers 2015/42, Institut d'Economia de Barcelona (IEB).
    4. Gabriel Zucman, 2013. "The Missing Wealth of Nations: Are Europe and the U.S. net Debtors or net Creditors?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(3), pages 1321-1364.
    5. Evans, Martin, 2013. "Global Imbalances, Risk, and the Great Recession," MPRA Paper 52363, University Library of Munich, Germany.
    6. Kym Anderson & Ernesto Valenzuela & Lee Ann Jackson, 2008. "Recent and Prospective Adoption of Genetically Modified Cotton: A Global Computable General Equilibrium Analysis of Economic Impacts," Economic Development and Cultural Change, University of Chicago Press, vol. 56(2), pages 265-296, January.
    7. Garg, Bhavesh & Prabheesh, K.P., 2021. "Testing the intertemporal sustainability of current account in the presence of endogenous structural breaks: Evidence from the top deficit countries," Economic Modelling, Elsevier, vol. 97(C), pages 365-379.
    8. Hossain, Ferdaus & Jensen, Helen H., 2000. "Lithuania's food demand during economic transition," Agricultural Economics, Blackwell, vol. 23(1), pages 31-40, June.
    9. Asche, Frank & Guttormsen, Atle G. & Kristofersson, Dadi & Roheim, Cathy A., 2005. "Import Demand Estimation and the Generalized Composite Commodity Theorem," 2005 Annual meeting, July 24-27, Providence, RI 19432, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. Li, Gang & Song, Haiyan & Witt, Stephen F., 2006. "Time varying parameter and fixed parameter linear AIDS: An application to tourism demand forecasting," International Journal of Forecasting, Elsevier, vol. 22(1), pages 57-71.
    11. Yongsung Chang & Sun-Bin Kim & Jaewoo Lee, 2013. "Accounting for Global Dispersion of Current Accounts," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(3), pages 477-496, July.
    12. Nzuma, Jonathan M. & Sarker, Rakhal, 2008. "An Error Corrected Almost Ideal Demand System for Major Cereals in Kenya," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6443, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    13. Jonathan M. Nzuma & Rakhal Sarker, 2010. "An error corrected almost ideal demand system for major cereals in Kenya," Agricultural Economics, International Association of Agricultural Economists, vol. 41(1), pages 43-50, January.
    14. Alberto Martin & Jaume Ventura, 2015. "Financial Reforms and Capital Flows: Insights from General Equilibrium," Central Banking, Analysis, and Economic Policies Book Series, in: Ricardo J. Caballero & Klaus Schmidt-Hebbel (ed.),Economic Policies in Emerging-Market Economies Festschrift in Honor of Vittorio Corbo, edition 1, volume 21, chapter 7, pages 109-137, Central Bank of Chile.
    15. Cubizol, Damien, 2018. "Transition and capital misallocation: the Chinese case," Journal of International Money and Finance, Elsevier, vol. 81(C), pages 88-115.
    16. Shirakawa, M., 2011. "Global imbalances and current account imbalances," Financial Stability Review, Banque de France, issue 15, pages 113-125, February.
    17. Laura Alfaro & Sebnem Kalemli-Ozcan & Vadym Volosovych, 2014. "Sovereigns, Upstream Capital Flows, And Global Imbalances," Journal of the European Economic Association, European Economic Association, vol. 12(5), pages 1240-1284, October.
    18. Feng, Xudong & Chern, Wen S., 2000. "Demand For Healthy Food In The United States," 2000 Annual meeting, July 30-August 2, Tampa, FL 21857, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    19. Yilmaz Akyuz, 2015. "The Global Economic Crisis and Asian Developing Countries: Impact, Policy Response and Medium Term Prospects," Working Papers id:7062, eSocialSciences.
    20. Anna Wong, 2017. "China’s Current Account : External Rebalancing or Capital Flight?," International Finance Discussion Papers 1208, Board of Governors of the Federal Reserve System (U.S.).

    More about this item

    JEL classification:

    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • R34 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Input Demand Analysis
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:agecon:v:45:y:2014:i:4:p:513-524. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/iaaeeea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.