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Just How Low are China's Labour Costs?

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  • Janet Ceglowski
  • Stephen Golub

Abstract

This paper provides a new perspective on Chinese international competitiveness in manufacturing using relative unit labour costs. We find that Chinese unit labour costs are about 25-40 per cent of US labour costs. They are also low relative to costs in the EU, Japan, Mexico, Korea and most other newly industrialising countries. However, China's relative unit labour costs indicate a substantially smaller cost advantage than that implied by a comparison of wages alone. China's cost advantage derives from large currency devaluations that preceded the establishment of a de facto peg around 1995, and rapid productivity growth in the period since 1995. Copyright 2007 The Authors Journal compilation 2007 Blackwell Publishing Ltd .

Suggested Citation

  • Janet Ceglowski & Stephen Golub, 2007. "Just How Low are China's Labour Costs?," The World Economy, Wiley Blackwell, vol. 30(4), pages 597-617, April.
  • Handle: RePEc:bla:worlde:v:30:y:2007:i:4:p:597-617
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    1. Ronald W. Jones, 2000. "Globalization and the Theory of Input Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 026210086x, January.
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    1. repec:gam:jecomi:v:5:y:2017:i:4:p:45-:d:119541 is not listed on IDEAS
    2. Campbell, Douglas L., 2016. "Measurement matters: Productivity-adjusted weighted average relative price indices," Journal of International Money and Finance, Elsevier, vol. 61(C), pages 45-81.
    3. Hideyuki Mizobuchi, 2015. "Measuring the comprehensive wage effect of changes in unit labor cost," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 4(1), pages 1-12, December.

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