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Rising Wages: Has China Lost Its Global Labor Advantage?

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Listed:
  • Yang, Dennis T.

    (University of Virginia)

  • Chen, Vivian

    (The Conference Board)

  • Monarch, Ryan

    (University of Michigan)

Abstract

We document dramatic rising wages in China for the period 1978-2007 based on multiple sources of aggregate statistics. Although real wages increased seven-fold during the period, growth was uneven across ownership types, industries and regions. Since the late 1990s, the wages of state-owned enterprises have increased rapidly and wage disparities between skill-intensive and labor-intensive industries have widened. Comparisons of international data show that China's manufacturing wage has already converged to that of Asian emerging markets, but China still enjoys enormous labor cost advantages over its neighboring developed economies. Our analysis suggests that China's wage growth will stabilize to a moderate pace in the near future.

Suggested Citation

  • Yang, Dennis T. & Chen, Vivian & Monarch, Ryan, 2010. "Rising Wages: Has China Lost Its Global Labor Advantage?," IZA Discussion Papers 5008, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp5008
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    References listed on IDEAS

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    More about this item

    Keywords

    wage growth; aggregate statistics; China; international comparison;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

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