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Wage increases, wage convergence, and the Lewis turning point in China


  • CAI, Fang
  • DU, Yang


We examine the wage trends of ordinary workers and the wage convergence between unskilled and skilled workers in China. First, we find that wages in all non-agricultural sectors, wages of migrant workers, and wages of hired workers in the agricultural sector have increased dramatically since 2003. Second, through comparing wage differentials between migrant and urban resident workers and between heterogeneous education groups within migrant workers, and by investigating the changes in the contribution of the returns to education to wage differentials, we find that the wages of unskilled and skilled workers have converged. Both the increasing wage trends and wage convergence are interpreted as evidence supporting the hypothesis that China has passed what can be called the Lewis turning point in the industrial sector. We conclude that the sustainability of economic growth in China requires an upgrading of labor market institutions to accommodate the merging of the rural and urban labor forces.

Suggested Citation

  • CAI, Fang & DU, Yang, 2011. "Wage increases, wage convergence, and the Lewis turning point in China," China Economic Review, Elsevier, vol. 22(4), pages 601-610.
  • Handle: RePEc:eee:chieco:v:22:y:2011:i:4:p:601-610
    DOI: 10.1016/j.chieco.2011.07.004

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    References listed on IDEAS

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    Cited by:

    1. Nathalie Chusseau & Joël Hellier, 2012. "Inequality in Emerging Countries," Working Papers hal-00993411, HAL.
    2. Wang, Xiaobing & Yamauchi, Futoshi & Otsuka, Keijiro & Huang, Jikun, 2016. "Wage Growth, Landholding, and Mechanization in Chinese Agriculture," World Development, Elsevier, vol. 86(C), pages 30-45.
    3. Zhang, Li & Sharpe, Rhonda Vonshay & Li, Shi & Darity, William A., 2016. "Wage differentials between urban and rural-urban migrant workers in China," China Economic Review, Elsevier, vol. 41(C), pages 222-233.
    4. repec:eee:chieco:v:46:y:2017:i:c:p:249-260 is not listed on IDEAS
    5. Dreger, Christian & Zhang, Yanqun, 2017. "The Hukou Impact on the Chinese Wage Structure," IZA Discussion Papers 10720, Institute for the Study of Labor (IZA).
    6. Chen, Zhao & Lu, Ming & Xu, Le, 2014. "Returns to dialect," China Economic Review, Elsevier, vol. 30(C), pages 27-43.
    7. repec:pal:eurjdr:v:29:y:2017:i:3:d:10.1057_s41287-017-0081-8 is not listed on IDEAS
    8. Yi, Hongmei & Song, Yingquan & Liu, Chengfang & Huang, Xiaoting & Zhang, Linxiu & Bai, Yunli & Ren, Baoping & Shi, Yaojiang & Loyalka, Prashant & Chu, James & Rozelle, Scott, 2015. "Giving kids a head start: The impact and mechanisms of early commitment of financial aid on poor students in rural China," Journal of Development Economics, Elsevier, vol. 113(C), pages 1-15.
    9. Zhiming Cheng, 2014. "The Effects of Employee Involvement and Participation on Subjective Wellbeing: Evidence from Urban China," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 118(2), pages 457-483, September.
    10. repec:spr:chfecr:v:4:y:2016:i:1:d:10.1186_s40589-016-0027-x is not listed on IDEAS
    11. Lu, Ming & Xia, Yiran, 2016. "Migration in the People’s Republic of China," ADBI Working Papers 593, Asian Development Bank Institute.
    12. Andrea Fracasso, 2015. "Economic Rebalancing and Growth: the Japanese experience and China’s prospects," DEM Discussion Papers 2015/07, Department of Economics and Management.
    13. Qu, Zhaopeng & Zhao, Zhong, 2017. "Glass ceiling effect in urban China: Wage inequality of rural-urban migrants during 2002–2007," China Economic Review, Elsevier, vol. 42(C), pages 118-144.
    14. Du, Julan & Fang, Hongsheng & Jin, Xiangrong, 2014. "The “growth-first strategy” and the imbalance between consumption and investment in China," China Economic Review, Elsevier, vol. 31(C), pages 441-458.
    15. Chen, Qin & Song, Zheng, 2014. "Accounting for China's urbanization," China Economic Review, Elsevier, vol. 30(C), pages 485-494.
    16. Shang-Jin Wei & Zhuan Xie & Xiaobo Zhang, 2017. "From "Made in China" to "Innovated in China": Necessity, Prospect, and Challenges," Journal of Economic Perspectives, American Economic Association, vol. 31(1), pages 49-70, Winter.
    17. Prema-chandra Athukorala & Zheng Wei, 2015. "Economic Transition and Labour Market Dynamics in China: An Interpretative Survey of the ‘Turning Point’ Debate," Departmental Working Papers 2015-06, The Australian National University, Arndt-Corden Department of Economics.
    18. repec:spr:soinre:v:132:y:2017:i:1:d:10.1007_s11205-016-1329-y is not listed on IDEAS
    19. Gordon Menzies & Xiaolin Xiao, 2012. "Non-traded Factor Appreciation in China," Working Paper Series 2, Economics Discipline Group, UTS Business School, University of Technology, Sydney.
    20. Sefa Awaworyi & Vinod Mishra, 2014. "Returns to Education in China: A Meta-analysis," Monash Economics Working Papers 41-14, Monash University, Department of Economics.


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