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China has reached the Lewis turning point

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  • Zhang, Xiaobo
  • Yang, Jin
  • Wang, Shenglin

Abstract

In the past several years, labor shortage in China has become an emerging issue. However, there is heated debate on whether China has passed the Lewis turning point and entered a new era of labor shortage from a period of unlimited labor supply. Most empirical studies on this topic focus on the estimation of total labor supply and demand. Yet the poor quality of labor statistics leaves the debate open. In this paper, China's position along the Lewis continuum is examined though primary surveys of wage rates, a more reliable statistic than employment data. Our results show a clear rising trend of real wages rate since 2003. The acceleration of real wages even in slack seasons indicates that the era of surplus labor is over. This finding has important policy implications for China's future development model.

Suggested Citation

  • Zhang, Xiaobo & Yang, Jin & Wang, Shenglin, 2011. "China has reached the Lewis turning point," China Economic Review, Elsevier, vol. 22(4), pages 542-554.
    • Handle: RePEc:eee:chieco:v:22:y:2011:i:4:p:542-554
    DOI: 10.1016/j.chieco.2011.07.002
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    References listed on IDEAS

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    1. Kaushik Basu, 2003. "Analytical Development Economics: The Less Developed Economy Revisited," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262523442, December.
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    3. John Knight, 2007. "China, South Africa and the Lewis Model," CSAE Working Paper Series 2007-12, Centre for the Study of African Economies, University of Oxford.
    4. Fan, Shenggen & Kanbur, Ravi & Zhang, Xiaobo, "undated". "China’s Regional Disparities: Experience and Policy," Working Papers 57041, Cornell University, Department of Applied Economics and Management.
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    More about this item

    Keywords

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    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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