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The Challenges After the Lewis Turning Point

In: Understanding China's Economy

Author

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  • Fang Cai

    (Chinese Academy of Social Sciences)

Abstract

This chapter primarily focuses on structural employment issues in the Chinese economy that have arisen since the passing of the Lewis turning point, and how to counter these challenges. The influence of labour market supply and demand relationships should result in raised wage levels and improved income distribution, but the institutional barriers of current labour markets mean that raising wages incurs systemic costs. Once an economy has passed the Lewis turning point, agricultural marginal labour productivity is no longer zero. There is still potential for, and also necessary to, continue the transition of surplus labour, but the precondition is that agricultural labour productivity rates rise in tandem. During this stage, if labour transitions cannot be substituted by increases in the labour productivity rate such as via that provided by mechanisation, then a fall in agricultural production will result.

Suggested Citation

  • Fang Cai, 2021. "The Challenges After the Lewis Turning Point," Springer Books, in: Understanding China's Economy, chapter 0, pages 113-131, Springer.
    • Handle: RePEc:spr:sprchp:978-981-33-6322-9_7
    DOI: 10.1007/978-981-33-6322-9_7
    as

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