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Labor market developments in China: A neoclassical view

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  • Ge, Suqin
  • Yang, Dennis Tao

Abstract

This paper assesses the applicability of two alternative theories in understanding labor market developments in China: the classical view featuring a Lewis turning point in wage growth versus a neoclassical framework emphasizing rational choices of individuals and equilibrating forces of the market. Empirical evidence based on multiple data sources fails to validate the arrival of the Lewis turning point in China, showing continuous and coordinated wage growth across rural and urban sectors instead. Consistent with the neoclassical view, we find that rural workers expanded off-farm work when mobility restrictions were lifted, interprovincial migration responded to expected earnings and local employment conditions, and returns to education converged gradually to the international standard. These findings suggest major progresses in the integration of labor markets in China.

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Article provided by Elsevier in its journal China Economic Review.

Volume (Year): 22 (2011)
Issue (Month): 4 ()
Pages: 611-625

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Handle: RePEc:eee:chieco:v:22:y:2011:i:4:p:611-625
Contact details of provider: Web page: http://www.elsevier.com/locate/chieco

Keywords: Labor markets; Rural–urban migration; Wage growth; Lewis turning point; China;

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Find related papers by 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
  • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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  1. Maurer-Fazio, Margaret, 1999. "Earnings and education in China's transition to a market economy Survey evidence from 1989 and 1992," China Economic Review, Elsevier, vol. 10(1), pages 17-40.
  2. Sylvie Démurger & Marc Gurgand & Shi Li & Ximing Yue, 2009. "Migrants as second-class workers in urban China? A decomposition analysis," Post-Print halshs-00451578, HAL.
  3. de Brauw, Alan & Huang, Jikun & Rozelle, Scott & Zhang, Linxiu & Zhang, Yigang, 2002. "The Evolution Of China'S Rural Labor Markets During The Reforms," Working Papers 11984, University of California, Davis, Department of Agricultural and Resource Economics.
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Cited by:

  1. Wenshu Gao & Russell Smyth, 2012. "Returns to Schooling in Urban China, 2001-2010: Evidence from Three Waves of the China Urban Labor Survey," Monash Economics Working Papers 50-12, Monash University, Department of Economics.
  2. Binkai Chen & Ming Lu & Ninghua Zhong, 2012. "Hukou and Consumption Heterogeneity: Migrants' Expenditure Is Depressed by Institutional Constraints in Urban China," Global COE Hi-Stat Discussion Paper Series gd11-221, Institute of Economic Research, Hitotsubashi University.
  3. Fleisher, Belton M. & McGuire, William H. & Smith, Adam Nicholas & Zhou, Mi, 2015. "Knowledge capital, innovation, and growth in China," Journal of Asian Economics, Elsevier, vol. 39(C), pages 31-42.
  4. Nathalie Chusseau & Joel Hellier, 2012. "Inequality in emerging countries," Working Papers 256, ECINEQ, Society for the Study of Economic Inequality.
  5. Bonatti, Luigi & Fracasso, Andrea, 2013. "Hoarding of international reserves in China: Mercantilism, domestic consumption and US monetary policy," Journal of International Money and Finance, Elsevier, vol. 32(C), pages 1044-1078.
  6. Ge, Suqin & Yang, Dennis T., 2012. "Changes in China's Wage Structure," IZA Discussion Papers 6492, Institute for the Study of Labor (IZA).
  7. Mishra, Vinod & Smyth, Russell, 2015. "Estimating returns to schooling in urban China using conventional and heteroskedasticity-based instruments," Economic Modelling, Elsevier, vol. 47(C), pages 166-173.
  8. Vinod Mishra & Russell Smyth, 2012. "Returns to Schooling in Urban China: New Evidence Using Heteroskedasticity Restrictions to Obtain Identification Without Exclusion Restrictions," Monash Economics Working Papers 33-12, Monash University, Department of Economics.
  9. Andrea Fracasso, 2015. "Economic Rebalancing and Growth: the Japanese experience and China’s prospects," DEM Discussion Papers 2015/07, Department of Economics and Management.
  10. Bonatti, Luigi & Fracasso, Andrea, 2013. "Regime switches in the Sino-American co-dependency: Growth and structural change in China," Structural Change and Economic Dynamics, Elsevier, vol. 25(C), pages 1-32.

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