Rising Wages: Has China Lost its Global Labor Advantage?

46 Pages Posted: 29 Jun 2010

See all articles by Dennis Tao Yang

Dennis Tao Yang

Chinese University of Hong Kong - Department of Economics

Vivian Chen

affiliation not provided to SSRN

Ryan Monarch

Federal Reserve Board

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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.

Keywords: wage growth, aggregate statistics, China, international comparison

JEL Classification: J31, J21, O5

Suggested Citation

Yang, Dennis Tao and Chen, Vivian and Monarch, Ryan, Rising Wages: Has China Lost its Global Labor Advantage?. IZA Discussion Paper No. 5008. Available at SSRN: https://ssrn.com/abstract=1631143

Dennis Tao Yang (Contact Author)

Chinese University of Hong Kong - Department of Economics ( email )

Shatin N.T.
Hong Kong
Hong Kong

Vivian Chen

affiliation not provided to SSRN

Ryan Monarch

Federal Reserve Board ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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