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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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    Cited by:

    1. Cao, Jing & Ho, Mun S. & Hu, Wenhao & Jorgenson, Dale, 2020. "Effective labor supply and growth outlook in China," China Economic Review, Elsevier, vol. 61(C).
    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. David Tao,Liang & Harry X,Wu, 2023. "Revisiting the role of ICT in China's growth," IDE Discussion Papers 883, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    5. Takatoshi Sasaki & Tomoya Sakata & Yui Mukoyama & Koichi Yoshino, 2021. "China's Long-Term Growth Potential: Can Productivity Convergence Be Sustained?," Bank of Japan Working Paper Series 21-E-7, Bank of Japan.
    6. Wu Harry X., 2019. "In Quest of Institutional Interpretation of TFP Change—The Case of China," Man and the Economy, De Gruyter, vol. 6(2), pages 1-22, December.
    7. 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.
    8. Takahiko Hashimoto, 2023. "Verification of technical change and cost and productivity criteria: An empirical study using the World Input–Output Database," Metroeconomica, Wiley Blackwell, vol. 74(3), pages 495-511, July.
    9. Harry X Wu, 2016. "China's Institutional Impediments to Productivity Growth," RBA Annual Conference Volume (Discontinued), in: Iris Day & John Simon (ed.),Structural Change in China: Implications for Australia and the World, Reserve Bank of Australia.
    10. 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.
    11. 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.

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