Rising Wages: Has China Lost its Global Labor Advantage?

23 Pages Posted: 27 Sep 2010

See all articles by Dennis Tao Yang

Dennis Tao Yang

Chinese University of Hong Kong - Department of Economics

Vivian Weijia 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. Over the past decade, the wages of state-owned enterprises have increased rapidly and wage disparities between skill-intensive and labour-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 labour cost advantages over its neighbouring developed economies. Our analysis suggests that China's wage growth will stabilize to a moderate pace in the near future.

Suggested Citation

Yang, Dennis Tao and Chen, Vivian Weijia and Monarch, Ryan, Rising Wages: Has China Lost its Global Labor Advantage?. Pacific Economic Review, Vol. 15, No. 4, pp. 482-504, October 2010. Available at SSRN: https://ssrn.com/abstract=1682269 or http://dx.doi.org/10.1111/j.1468-0106.2009.00465.x

Dennis Tao Yang (Contact Author)

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

Shatin N.T.
Hong Kong
Hong Kong

Vivian Weijia Chen

affiliation not provided to SSRN

No Address Available

Ryan Monarch

Federal Reserve Board ( email )

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

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