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Constructing Annual Employment and Compensation Matrices and Measuring Labor Input in China

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  • Harry WU
  • Ximing YUE
  • George G. ZHANG

Abstract

This paper documents the procedures in constructing China's employment and compensation metrics and measuring labor input in the Chinese economy. We begin with discussions of major conceptual, coverage, and classification problems in the official labor statistics and then propose strategies to solve the problems using a labor indexing methodology. This methodology allows the human capital attributes of any employed person weighted by their specific costs and the sum of the costs is controlled by the national income accounts. It guides our basic data work to adjust breaks, fill gaps, and restore consistencies in annual statistics and in benchmark marginal matrices. We use the iterative proportional filling (IPF) approach to obtain full-dimensioned employment and compensation matrices for benchmarks and, based on which, we then construct the matrices in time series. We show that China's total (cost-weighted) labor input grew by 4.1% per annum in 1980-2010, of which changes in quality and in hours worked made almost equal contributions. We also find that nearly half of the 2% quality improvement was attributable to changes in the industrial structure, followed by changes in education attainment and age structure.

Suggested Citation

  • Harry WU & Ximing YUE & George G. ZHANG, 2015. "Constructing Annual Employment and Compensation Matrices and Measuring Labor Input in China," Discussion papers 15005, Research Institute of Economy, Trade and Industry (RIETI).
  • Handle: RePEc:eti:dpaper:15005
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    File URL: https://www.rieti.go.jp/jp/publications/dp/15e005.pdf
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    References listed on IDEAS

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    1. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February.
    2. Barro, Robert J & Lee, Jong-Wha, 2001. "International Data on Educational Attainment: Updates and Implications," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 541-563, July.
    3. Frank Gollop & Dale Jorgenson, 1980. "U.S. Productivity Growth by Industry, 1947–73," NBER Chapters, in: New Developments in Productivity Measurement and Analysis, pages 15-136, National Bureau of Economic Research, Inc.
    4. Borensztein, Eduardo & Ostry, Jonathan D, 1996. "Accounting for China's Growth Performance," American Economic Review, American Economic Association, vol. 86(2), pages 224-228, May.
    5. Andreas (Andy) Jobst & Harry X. Wu, 2008. "Measuring China’s Economic Performance," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 9(2), pages 13-44, April.
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    Cited by:

    1. Wang, Feng & Liu, Xiying & Nguyen, Tue Anh, 2018. "Evaluating the economic impacts and feasibility of China's energy cap: Based on an Analytic General Equilibrium Model," Economic Modelling, Elsevier, vol. 69(C), pages 114-126.
    2. Zhao, Jingfeng & Tang, Jianmin, 2018. "Understanding agricultural growth in China: An international perspective," Structural Change and Economic Dynamics, Elsevier, vol. 46(C), pages 43-51.
    3. Jong-Wha Lee, 2017. "China's economic growth and convergence," The World Economy, Wiley Blackwell, vol. 40(11), pages 2455-2474, November.
    4. Wu, Harry X., 2019. "Towards an Institutional Interpretation of TFP Changes in China," CEI Working Paper Series 2019-4, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    5. Li, Zhan, 2020. "Are Capital And Labor Inputs Properly Measured In China?," SSPJ Discussion Paper Series DP19-006, Service Sector Productivity in Japan: Determinants and Policies, Institute of Economic Research, Hitotsubashi University.

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