Does China Still Have a Labor Cost Advantage?

32 Pages Posted: 22 Sep 2011

See all articles by Janet Ceglowski

Janet Ceglowski

Bryn Mawr College - Department of Economics

Stephen S. Golub

Swarthmore College - Economics Department

Date Written: September 22, 2011

Abstract

In recent years wages in China have been rising and the yuan has appreciated, potentially eroding China’s cost advantage in manufactures. This paper explores the evolution of China’s relative unit labor costs in manufacturing over 1998-2009. Between 1998 and 2003 China’s unit labor costs fell, but since 2003 they have increased both absolutely and relative to US unit labor costs. Much of the rise in China’s relative unit labor costs can be traced to a real appreciation of the yuan against the dollar. Despite the recent rise, China’s unit labor costs remain low relative to those in most other countries.

Keywords: China, labor costs, productivity, international competitiveness, real exchange rate

JEL Classification: F020, F140, F160, F310, J300

Suggested Citation

Ceglowski, Janet and Golub, Stephen S., Does China Still Have a Labor Cost Advantage? (September 22, 2011). CESifo Working Paper Series No. 3579, Available at SSRN: https://ssrn.com/abstract=1932066

Janet Ceglowski (Contact Author)

Bryn Mawr College - Department of Economics ( email )

Bryn Mawr, PA 19010
United States
610-526-5039 (Phone)
610-526-7475 (Fax)

Stephen S. Golub

Swarthmore College - Economics Department ( email )

Swarthmore, PA 19081
United States
610-328-8103 (Phone)
Not Available (Fax)

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