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Rising Wages: Has China Lost Its Global Labor Advantage?

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  • Dennis Tao Yang
  • Vivian Weijia Chen
  • Ryan Monarch

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. Over the past decade, the wages of state‐owned enterprises have increased rapidly and wage disparities between skill‐intensive and labour‐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 labour cost advantages over its neighbouring developed economies. Our analysis suggests that China's wage growth will stabilize to a moderate pace in the near future.

Suggested Citation

  • Dennis Tao Yang & Vivian Weijia Chen & Ryan Monarch, 2010. "Rising Wages: Has China Lost Its Global Labor Advantage?," Pacific Economic Review, Wiley Blackwell, vol. 15(4), pages 482-504, October.
  • Handle: RePEc:bla:pacecr:v:15:y:2010:i:4:p:482-504
    DOI: 10.1111/j.1468-0106.2009.00465.x
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    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

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