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China has reached the lewis turning point

  • Zhang, Xiaobo
  • Yang, Jin
  • Wang, Shenglin

In the past several years, labor shortages in China have become an issue. However, there is heated debate as to whether China has passed the Lewis turning point and moved from a period of unlimited supply to a new era of labor shortage. Most empirical studies on this topic focus on estimation of total labor supply and demand. Yet the poor quality of China’s labor statistics leaves the debate open. In this paper, China’s position along the Lewis continuum is examined though primary surveys of wage rates, which offer a more reliable statistic than employment data. Our results show a clear rising trend in real wage rates since 2003. The acceleration of real wages even in slack seasons indicates that the era of surplus labor is over. This finding has important policy implications for China’s future development.

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Paper provided by International Food Policy Research Institute (IFPRI) in its series IFPRI discussion papers with number 977.

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Date of creation: 2010
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Handle: RePEc:fpr:ifprid:977
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  1. Kaushik Basu, 2003. "Analytical Development Economics: The Less Developed Economy Revisited," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262523442, June.
  2. John Knight, 2007. "China, South Africa and the Lewis Model," Economics Series Working Papers WPS/2007-12, University of Oxford, Department of Economics.
  3. Fan, Shenggen & Kanbur, Ravi & Zhang, Xiaobo, 2010. "China’s Regional Disparities: Experience and Policy," Working Papers 57041, Cornell University, Department of Applied Economics and Management.
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