Chronicle of a Decline Foretold; Has China Reached the Lewis Turning Point?
China is on the eve of a demographic shift that will have profound consequences on its economic and social landscape. Within a few years the working age population will reach a historical peak, and then begin a precipitous decline. This fact, along with anecdotes of rapidly rising migrant wages and episodic labor shortages, has raised questions about whether China is poised to cross the Lewis Turning Point, a point at which it would move from a vast supply of low-cost workers to a labor shortage economy. Crossing this threshold will have far-reaching implications for both China and the rest of the world. This paper empirically assesses when the transition to a labor shortage economy is likely to occur. Our central result is that on current trends, the Lewis Turning Point will emerge between 2020 and 2025. Alternative scenariosâ€”with higher fertility, greater labor participation rates, financial reform or higher productivityâ€”may peripherally delay or accelerate the onset of the turning point, but demographics will be the dominant force driving the depletion of surplus labor.
|Date of creation:||29 Jan 2013|
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- John Knight & Deng Quheng and Li Shi, 2010.
"The Puzzle of Migrant Labour Shortage and Rural Labour Surplus in China,"
Economics Series Working Papers
494, University of Oxford, Department of Economics.
- Knight, John & Deng, Quheng & Li, Shi, 2011. "The puzzle of migrant labour shortage and rural labour surplus in China," China Economic Review, Elsevier, vol. 22(4), pages 585-600.
- repec:gdm:wpaper:1106 is not listed on IDEAS
- Zhang, Xiaobo & Yang, Jin & Wang, Shenglin, 2011.
"China has reached the Lewis turning point,"
China Economic Review,
Elsevier, vol. 22(4), pages 542-554.
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