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Measuring Changes In Competitiveness In Chinese Manufacturing Industries Across Regions In 1995-2004:An Unit Labor Cost Approach

Author

Listed:
  • Vivian W. Chen

    () (The Conference Board)

  • Harry X. Wu

    () (The Hong Kong Polytechnic University)

  • Bart van Ark

    () (The Conference Board and University of Groningen)

Abstract

Using an industry-by-region data set, based on China’s Third Industrial Census for 1995 and First Economic Census for 2004, and covering 28 industries and 30 provinces, this paper examines the trend of labor compensation (ALC), labor productivity (ALP) and unit labor cost (ULC) by manufacturing industry across regions (provinces or groups of provinces). At the aggregate level, it shows that productivity growth was generally faster than that of labor compensation and hence resulted in a significant decline in unit labor cost for all regions in China. Furthermore, compared to more developed regions, less developed regions exhibited even stronger productivity growth relative to compensation, thus leading to a convergence across regions over this period. However, we observe a substantial variation in growth rates and convergence trends across regions for individual industries. Logit regression shows that labor intensive industries are more likely to converge in productivity, compensation and unit labor cost while skill intensive industries tend to increase inequality in unit labor cost. This is confirmed by estimating a growth regression, which shows that in provinces characterized by higher skill levels of the labor force, skill intensive industries experienced faster decline in ULC.

Suggested Citation

  • Vivian W. Chen & Harry X. Wu & Bart van Ark, 2008. "Measuring Changes In Competitiveness In Chinese Manufacturing Industries Across Regions In 1995-2004:An Unit Labor Cost Approach," Economics Program Working Papers 08-03, The Conference Board, Economics Program.
  • Handle: RePEc:cnf:wpaper:0803
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    File URL: http://www.conference-board.org/economics/workingpapers.cfm?pdf=E-0030-08-WP
    File Function: First version, 2008
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    More about this item

    Keywords

    Labor productivity; average labor compensation; unit labor cost; and regional convergence;

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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