The Myth of Worker Exploitation in the Chinese Manufacturing Sector

29 Pages Posted: 11 Feb 2019

See all articles by Linan Peng

Linan Peng

George Mason University, Department of Economics

Joshua Ingber

George Mason University, Department of Economics; Government of the United States of America - Bureau of Economic Analysis (BEA)

Date Written: January 2, 2019

Abstract

Many news outlets and scholars have expressed concerns that workers have been unfairly exploited by employers in the Chinese manufacturing sector. Economic theory suggests that this exploitation, if it exists, is the result of employers in the manufacturing sector having considerable monopsony power. While there is a vast economic literature on monopsony power in the United States and other nations, little monopsony research has been conducted on the Chinese manufacturing market. This paper follows the monopsony research tradition and examines the Chinese manufacturing sector along several likely indicators of monopsony power. These include the turnover rate in the manufacturing sector, the relation between marginal factor cost and average factor cost, the relation between average real labor productivity and real wage in the manufacturing sector, and the comparison of labor costs between China and other countries. This study found that worker exploitation/monopsony in the manufacturing sector is not as severe as previously reported.

Keywords: monopsony, worker exploitation, Chinese manufacturing sector

JEL Classification: J42, J80

Suggested Citation

Peng, Linan and Ingber, Joshua, The Myth of Worker Exploitation in the Chinese Manufacturing Sector (January 2, 2019). Available at SSRN: https://ssrn.com/abstract=3326608 or http://dx.doi.org/10.2139/ssrn.3326608

Linan Peng (Contact Author)

George Mason University, Department of Economics ( email )

Fairfax, VA
United States

Joshua Ingber

George Mason University, Department of Economics ( email )

Fairfax, VA
United States

Government of the United States of America - Bureau of Economic Analysis (BEA) ( email )

1441 L Street NW
Washington, DC 20910
United States

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